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New Sanctions on Turkey Include Export Controls, Tariff Increase, and Halt to Trade Talks

Wednesday, October 16, 2019
Sandler, Travis & Rosenberg Trade Report

President Trump announced Oct. 14 several trade-related actions against Turkey in response to a military offensive it recently launched into Syria. Press reports indicate that Congress is moving toward imposing even stricter sanctions.

The president said he would increase the Section 232 tariff on steel products imported from Turkey back to 50 percent. This tariff was lowered to 25 percent in May after imports of steel from Turkey dropped 48 percent in 2018.

Trump said the U.S. will also immediately cease negotiations on an agreement aimed at increasing bilateral trade to $100 billion a year. A Bloomberg article states that this “deal was to include the furniture, marble, autos and civil aviation industries.”

In addition, the president issued an executive order that includes the following provisions.

- prohibits exports and other actions with respect to property and interests in property that are in the U.S. or under the control of a U.S. person of specified categories of entities, including those who operate in specific sectors of the Turkish economy, current or former Turkish government officials, Turkish government agencies, and others

- requires a ban on imports of goods, technology, and services, as well as U.S. government procurement of goods or services, from those who engage in specified activities with respect to the conflict in Syria

- allows secondary sanctions on those not subject to U.S. jurisdiction who provide goods, services, or other support to sanctioned persons

- allows restrictions on foreign financial institutions that knowingly conduct or facilitate any significant financial transaction for or on behalf of a blocked person

However, the Treasury Department’s Office of Foreign Assets Control has issued a general license allowing through Nov. 12 transactions and activities otherwise prohibited by this EO that are ordinarily incident and necessary to the wind-down of operations, contracts, or other agreements involving Turkey’s Ministry of National Defense or Ministry of Energy and Natural Resources or any entity in which one or both such ministries directly or indirectly own a 50 percent or greater interest.

OFAC has also added these two ministries and three government ministers to its Specially Designated Nationals list, which blocks their assets and generally prohibits U.S. persons from dealing with them.  

The latest actions continue what has been a tense year in U.S.-Turkey trade relations. Previously the U.S. terminated Turkey’s eligibility for duty-free treatment under the Generalized System of Preferences, added Turkey to the list of countries subject to section 201 safeguard tariff-rate quotas on crystalline silicon photovoltaic cells and large residential washing machines, and pledged to seek changes at the World Trade Organization that would prevent Turkey and other self-declared developing countries from availing themselves of certain flexibilities in WTO rules and negotiations.

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