Istanbul, Apr 7 (AP) As the dust settled on President Donald Trump's tariffs, business figures and economists in Turkiye have begun to glimpse a silver lining to the economic storm clouds.

Turkiye was hit with a baseline 10 per cent tariff in Trump's announcement last week, compared with higher tariffs for many other countries, raising the prospect that the world's 17th largest economy could leverage an advantage from the tariff regime.

Finance Minister Mehmet Simsek said Monday that the country's focus on domestic demand rather than exports would mean a more limited impact on the economy.

“Turkiye has free trade agreements with a total of 54 countries outside the US and the EU,” he said, adding that “68 per cent of our exports go to these countries.” Turkiye has a customs union with the European Union that removes trade restrictions.

Speaking Friday, the day after Trump's announcement, Simsek said Turkiye's “relatively low tariff rate may provide a comparative advantage in some sectors.” Can Selcuki, managing partner of Istanbul Economics Research, said the main negative effect on Turkiye would likely be through intermediate goods it supplies to countries or entities that export to the US which are subject to higher rates, such as the EU, which is subject to a 20 per cent tariff.

Turkish exports to the US were USD 16.7 billion in 2024, according to the Office of US Trade Representative. It imports a similar level of goods and services from America.

This level is dwarfed by exports to the EU, which President Recep Tayyip Erdogan said in January reached USD 108.7 billion last year.

“Any loss of competitive power of EU products inevitably impacts Turkiye because Turkiye exports intermediate goods to input to final EU products,” Selcuki said. “This is the most obvious negative part.” Turkiye, however, could exploit the new global trade environment to its advantage.

“A lot of manufacturing production will have to be relocated and the picture Trump is drawing is telling everybody to rethink their supply chains,” Selcuki added. “Turkiye, with its strong manufacturing base and closeness to the EU, is in a unique position to make use of this reorganisation.” Sekib Avdagic, president of the Istanbul Chamber of Commerce, suggested that companies based in countries with higher tariff rates, such as China, may seek to open factories in Turkiye to export to the US under a lower rate.

“Turkiye's use of this opportunity will depend on its strategy to develop its export sectors and find new markets,” he told the state-run Anadolu news agency.

Gurkan Yildirim, head of the Turkish Young Businessmen Association, added that “if Turkiye offers a suitable investment environment, it can attract the investments of these companies.” Selva Bahar Baziki, an economist at Bloomberg Economics in Ankara, noted that even considering indirect trade through third countries, less than 2 per cent of Turkiye's GDP was exposed to US demand.

The most threatened industries would be those exporting metals and textiles.

Addressing the volatility that has beset the Turkish lira in recent years, which influenced high inflation, Baziki added that tariffs would produce “no inflationary pressure from exchange rate movements related to trade policies.” (AP) GSP

Tariff-driven comparative advantage: lower US duties on one country may attract supply chain relocation and investment opportunities. A recent unilateral US tariff adjustment leaves Turkiye under a relatively lower baseline duty, creating potential comparative advantage for Turkish exporters. While Turkiye's free trade agreements and customs union constrain direct exposure, indirect vulnerability arises from supplying intermediate goods to jurisdictions facing higher US tariffs. Metal and textile sectors are most at risk, but multinational supply-chain relocations could allow Turkiye to attract manufacturing and investment if it implements targeted export and investment strategies.