Prior to Trump's announcement, the Turkish lira fell to its lowest point ever against the US dollar on Friday.
Image: Donald Trump claimed 'relations with Turkey are not good at this time!'
The President threatened to levy harsh tariffs on Turkey last month, demanding the release of an American pastor now held by Erdogan's government. Trump wrote on Twitter. Turkish officials held talks in Washington this week but there was no breakthrough.
"As he stated, the president has authorized the preparation of documents to raise tariffs on imports of steel and aluminum from Turkey", White House Deputy Press Secretary Lindsay Walters said.
On Friday, the euro sagged to a 13-month low against the dollar, down 0.7 per cent to $1.1450, after the Financial Times reported that the European Central Bank was anxious about possible losses at eurozone banks operating in Turkey.
Turkey's massive debt obligation to other countries is evident in the extraordinarily large percentage of its debt that is denominated in foreign currencies.
Turkish newspaper Hurriyet and other media reports quote Erdogan as making the comment to a group of worshippers following traditional Muslim Friday prayers during a visit to the northern city of Bayburt. "Repeated efforts to communicate to the United States administration that none of the stated criteria driving America's tariffs are applicable to Turkey have thus far proven fruitless", he said.
Erdogan called on Turks to not be concerned about exchange rate movements, mockingly declaring "the dollar, the mollar will not cut our path".
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It is possible that Trump cited the lira's decline as a mere pretense for pressuring Turkey to release the American pastor.
A plummeting Turkish lira sent ripples through global equities and emerging markets on Friday, as rising fears of a wider fallout sent investors scurrying for the safety of assets such as the yen and US government bonds.
The Turkish lira hit a record low of 6.24 per dollar on Friday, before recovering to 5.92 _ still down a whopping 7 per cent on the day.
Turkey's currency fell Friday after its economy was rattled by the United States' move to slap the country with more tariffs.
Despite Trump's insistence, Turkey has not budged in freeing American pastor Andrew Brunson, who has been detained by Turkey for nearly two years on charges that he was working with a terrorist organization and was a spy.
'However, I say it once again from here. The central bank, officially independent, appears to have heeded Erdogan and has not raised rates when many - including the International Monetary Fund - said it should have.
It was reported that Erdogan's son-in-law and Turkey's new finance minister, Berat Albayrak, were set to unveil a "new economic model" on Friday, but the announcement did little to reassure investors. "This is a national, domestic battle", he said. As the currency drops, Turkish companies and households with debt in foreign currencies see their debts expand.
The lira briefly fell as much as 14.6 percent - its biggest one-day drop since early 2001 - before paring losses.