The NATO allies have been at loggerheads over a wide range of topics, including diverging interests in Syria, Ankara's ambition to buy Russian defence systems and Andrew Brunson, a pastor on trial for terrorism charges.
On Tuesday, a White House official quoted by the Reuters news agency hinted at further economic measures against Turkey if Brunson was not released. While officially the bad debt ratio at Turkey's banks is just 3 per cent, lenders are in the process of renegotiating upwards of US$20 billion of loans to try to prevent them from going into default.
Pekcan said, according to the report, "the United States is an important trading partner, but it is not our only partner. Theirs are out of retaliation", White House spokeswoman Sarah Sanders told reporters.
Some Turks are reacting with defiance to their plunging currency and an escalating trade and political dispute with the United States - an indication that they are ready to endure economic pain and risk further deterioration in a key, yet troubled alliance dating from the Cold War.
Turkey announced Wednesday increased duties on US products including cars, tobacco and alcohol in retaliation to USA sanctions and tariffs on Turkey in an on-going feud over the detention of an American pastor.
It rebounded some 6 percent on Wednesday, briefly strengthening to less than 6.0 against the dollar, after the central bank squeezed lira liquidity in the market, effectively pushing up rates and supporting the currency.
Trump administration officials are also pointing out that the basic reason for the Lira's collapse is not so much what the United States has done as it is long-standing flaws in Turkish economic policies.
Tariffs have been imposed on 22 types of produce and goods imported from the United States, amounting to $533 million U.S. of extra duties, according to a report in the state-run Anadolu Agency, quoting Rushar Pekcan, the country's trade minister. Overall, the duties will amount to $533 million, a relatively small sum that is unlikely to hurt US companies much and appears meant instead to make a political point.
"For the currency to drop 40 percent is a sign that there are a lot of economic fundamentals that are out of whack in that country", Hassett said.
Markets are concerned by Erdogan's influence over the economy and his resistance to interest rate increases to tackle double-digit inflation.
Erdogan's appointment of his own son-in-law as Finance Minister, following his electoral victory in June, was "the final straw for global investors", Foreign Policyreported, citing Aaron Stein of the Atlantic Council. "But apparently, they are ready to give up using them", said Muzaffer Cengiz, an owner of a mobile phone store in central Istanbul.
"The administration has taken decisive aggressive action, and I am so thankful", Brownback said.
On July 26, US Vice President Pence called on Turkish President Erdogan to release Brunson or face significant sanctions.