'There is a cost for those who are plotting the operation' - Erdogan vows iPhone boycott

President Recep Tayyip Erdogan vowed to boycott iPhones in a demonstration of defiance as the US held firm to its demand that Turkey release an evangelical pastor, and Turkish executives called for action to bolster the lira.

The lira lost a quarter of its value this month as US President Donald Trump doubled tariffs on Turkish steel and aluminum imports.

There is a cost for those who are plotting the operation” against Turkey, Mr Erdogan said in televised remarks from Ankara.

Singling out the iPhone, he suggested Turks buy Samsung or locally made Venus Vestel smartphones instead.

While diplomatic tensions rage, the lira rallied for the first time in a week. It rose over 5% to 6.5530 per dollar at one stage. Bonds also recovered yesterday, with the yield on 10-year notes falling 132 basis points to 21.37%. The cost of insuring the nation’s debt against default dipped off 10-year highs. Tourists and foreign shoppers have benefited but corporate profits from selling goods locally are dwindling.

EU banks’ exposure to Turkey totals more than €88bn. BBVA, UniCredit of Italy and France’s BNP Paribas are the most exposed, with BBVA owning 49.9% of Garanti. UniCredit has almost 41% of Yapi Kredi, while BNP’s local subsidiary is called TEB.

Toyota makes about 280,000 cars a year at its Turkish plant, which has been in operation since 1994. However, some nine out of 10 of those cars are exported to European markets, and it conducts most of its business with suppliers in euros, providing a natural hedge from the country’s currency crisis. It has invested €1.7bn in the plant.

Volkswagen delivered about 158,000 vehicles in Turkey last year, though that’s a drop in the bucket for a company that produced almost 11m vehicles overall. VW’s MAN heavy truck brand has a facility near Ankara and currently produces city buses and coaches for the MAN and Neoplan brands.

Meanwhile, Daimler’s Mercedes-Benz is adding capacity at the Aksaray plant, where the company employs about 1,800 workers. Daimler also produces buses on the outskirts of Istanbul, most of which are exported. That plant employs some 3,300 people.

Mitsubishi Heavy Industries, one of Japan’s largest nuclear power plant makers, may see further delays in orders related to the planned €19bn Sinop power station in northern Turkey.

Aeroports de Paris, the French airport operator, has invested heavily in Turkey in recent years. In fashion, Hugo Boss will have lower costs when expenses are translated into euros. Its largest plant is located in Turkey, with 3,777 employees. Similarly, Inditex, the Spanish owner of the Zara brand, makes about 15% of its goods in Turkey.

Tobacco Japan Tobacco, which sells its Winston and Camel cigarettes among others in Turkey, holds about 28% of the tobacco market in the country. Lufthansa has a 50-50 joint venture with Turkish Airlines called SunExpress, a leisure carrier with about 72 aircraft and more than 3,800 staff, and may benefit from the falling lira. Travel giant TUI and Thomas Cook have said summer volumes were strong.

Vodafone invested in Turkey and accounted for about 6% of its annual revenue. Telia, Sweden’s former phone monopoly, is the largest shareholder in the country’s top telecom carrier, Turkcell.

Bloomberg