Economy

Turkey worried that cheap Asian goods will hurt economy

April 23, 2025, 12:34 PM

Container vessels in Istanbul's Ambarli Port. Turkey's manufacturing base is struggling with rising borrowing costs

Fallout from US-China tariff war
Finance minister’s ‘dumping’ concerns
Asian companies could set up in Turkey

Turkey is concerned that an enduring trade war between the US and China and other Asian countries may encourage manufacturers to flood Turkey’s market with cut-price goods to make up for US losses, the finance minister has said.

That could damage Turkey’s own manufacturing base, already struggling with high and rising borrowing costs and domestic political uncertainty.

The US has placed levies of 145 percent on imports from China, all but bringing more than $400 billion of annual Chinese exports to the US to a halt.

China is by far the world’s largest manufacturing country, accounting last year for more than 30 percent of total global output, according to the World Bank.

“It’s very rare for countries, for any countries, including Asian countries, to destroy capacity, manufacturing capacity,” Turkish Finance Minister Mehmet Şimşek said this week in Washington at the annual spring meetings of the International Monetary Fund.

“They have massive scale and they’re more likely to dump it on our markets.”

President Trump also hit other Asian manufacturers with levies, including Vietnam with 46 percent and India with 26 percent. India is the world’s fifth biggest global manufacturer.

Still, there may be a ‘silver lining’ for Turkey. As Asian countries scramble to find new markets for their goods, they may consider Turkey as a base for manufacturing to be closer to markets such as the European Union, Şimşek said.

“Some Asian players may want to have some base in Turkey to cater to the needs of some of these markets,” he said.

The country’s network of 54 free trade agreements – over and above its customs union with the EU – and reliance on bilateral exchanges with neighbours may shield Europe’s seventh largest economy from the worst of the fallout from a global trade war, Şimşek said.

“If you look at our overall exports, over 80 percent is with countries that either we have free trade agreements with or that are in the immediate neighborhood… (such as) Central Asia, Middle East, North Africa,” Şimşek said.

International trade in goods makes up less than 20 percent of GDP, and 29 percent if services are included.

“We rely on mainly domestic demand, investments and consumption within Turkey for growth,” Şimşek said.

The IMF said in its latest World Economic Outlook report that economic growth in Turkey is forecast ‘to bottom out’ at 2.7 percent this year and pick up to 3.2 percent next year “owing to recent pivots in monetary policy.”

The finance minister, who has been in office for nearly two years, said that Turkey’s macroeconomic stabilisation reforms – which aim to shore up public finances and reduce inflation – are “broadly on track.”

Political unrest surrounding the arrest last month of Istanbul mayor and popular opposition politician Ekrem Imamoglu should not distract investors from the fundamentals of the Turkish economy, he said.

“If you’re taking a long-term perspective, Türkiye, in my view, is still a compelling case, despite some issues that occasionally emerge,” Şimşek said.