President Donald Trump administration announced that it would higher the tariffs on Turkish steel and aluminum over the detainment of American evangelical pastor Andrew Brunson, who was arrested in 2016.
Relations between the two countries deteriorated in the wake of US President Donald Trump's decision to increase tariffs on Turkish aluminum and steel to 20% and 50% respectively.
Turkey and the USA are now experiencing rocky relations following Washington's imposition of sanctions on Interior Minister Suleyman Soylu and Justice Minister Abdulhamit Gul for not releasing American Pastor Andrew Brunson, who faces terrorism charges in Turkey.
The Turkish foreign ministry hit back at Trump's comments, saying that the "only result will be harming our relationship" and vowing unspecified retaliation.
Trump's "jubilation in inflicting economic hardship on its North Atlantic Treaty Organisation ally Turkey is shameful", he wrote.
The lira tumbled about 10 per cent on Friday to another record low as investors worry about Erdogan's unorthodox economic policies and United States sanctions.
Sharing a picture of how his country sees the crisis with the Trump's, Mr. Erdogan wrote in the American newspaper that unless the USA changed course, Turkey would look for new friends and allies. Immediately give these to the banks and convert to Turkish lira and by doing this, we fight this war of independence and the future.
In Rize, Erdogan said the USA would pay a price by challenging Turkey for the sake of "petty calculations", denouncing Washington for declaring "economic war on the entire world" and holding countries "for ransom through sanction threats".
Iran's Foreign Minister Mohammad Javad Zarif waded into the mounting row between Turkey and the United States, accusing Washington of an "addiction to sanctions and bullying".
The sudden announcement turned a run on the Turkish lira into a rout; it crashed more than 18 percent to a new record low against the dollar.
The tensions with Washington have, for investors, underscored Turkey's authoritarian trajectory under Erdogan.
Erdogan downplayed the currency crisis in a speech on Friday, advising Turks not to be anxious over exchange rate fluctuations.
The prospects for Albayrak being able to pursue an independent economic policy to safeguard the autonomy of the Central bank do not appear good.
His tone echoed that of a speech given on Thursday when he told supporters that "if they have dollars, we have our people, our righteousness, and our God".
In 2017, 19 billion dollars worth of goods were traded between the USA and Turkey.
Turkish President Tayyip Erdogan talks to media in the Black Sea city of Ordu, Turkey August 11, 2018.
Gyorgy Kovacs, the chief economist for EMEA emerging markets at UBS, pointed out that a massive rate hike of between 350 to 400 basis points would be "consistent with real rate levels that in the past helped to stabilize the currency".
Analysts suggest Erdogan could have Washington in mind, given Ankara is demanding the extradition of USA -based Turkish cleric Fethullah Gulen, who is blamed for masterminding the botched 2016 military takeover. But experts argue that the central bank should instead raise interest rates to ease inflation and to support the currency.
The United States is the biggest destination for Turkish steel exports.