Türkiye in a Rewired Transatlantic Trade System
ANKARA / BRUSSELS — As global commerce shifts from easy integration to a more fragmented, security-driven order, Türkiye is recalibrating how it trades with its two anchor markets, the European Union and the United States. The new baseline is higher, more targeted tariffs—especially in Washington—alongside a premium on resilient supply chains and rules that tie market access to climate and security standards. For an economy long powered by export growth and EU market access, the adjustment is structural, not cyclical.
The EU remains Türkiye’s principal commercial platform, underpinned by the 1995 customs union. That framework still carries much of Türkiye’s goods trade, even as it increasingly fails to cover where value is now created—agriculture, services, and public procurement are largely outside its scope. Brussels’ carbon border adjustment mechanism and Türkiye’s planned emissions trading scheme will define the cost of selling into Europe over the next decade. Aligning carbon rules and modernizing the customs union, even through targeted administrative fixes rather than a wholesale treaty rewrite, have become the practical levers for protecting export competitiveness.
Across the Atlantic, Ankara faces a tougher tariff posture. The United States has leaned into “reciprocal” tariffs with few carve-outs for inputs not produced domestically, pushing partners toward bespoke deals. This stance complicates Türkiye’s access at the very moment it is trying to lift the export share of growth and narrow a stubborn current-account gap. At home, imported energy and intermediate goods keep pressure on the trade balance, while inflation and wage catch-up blunt the usual competitiveness gains from a weaker lira. The result is a delicate policy mix: orthodoxy in monetary and fiscal settings to cool prices, and targeted industrial measures to reduce reliance on foreign inputs without triggering broader protectionism.
Competition from China is a second structural headwind. Industrial overcapacity in the Chinese economy is spilling into third markets, squeezing Turkish manufacturers in metals, solar components, and electric vehicles. Ankara has responded with safeguard actions—most visibly the 40 percent tariff and minimum price on Chinese EVs and new trade remedies in energy-adjacent supply chains. Those moves buy time but also risk friction at the World Trade Organization if they are not paired with a credible plan to upgrade domestic capacity.
The opportunity set is nevertheless tangible. On the European track, Türkiye can limit CBAM exposure by synchronizing its carbon market with the EU’s and by using critical-raw-materials cooperation—boron, chromium, tungsten, cobalt, and others—as a basis for pragmatic customs-union fixes that clear bottlenecks at the border. On the US track, reducing defense-industrial frictions would unlock investment and technology partnerships that have been stalled by sanctions and export-control uncertainty since the S-400 dispute. Both vectors point to the same requirement: predictable rules that lower the risk premium for investors who must finance plant upgrades, cleaner processes, and higher-value product lines.
Inside Türkiye, the Medium-Term Program signals that policy is shifting from consumption-led growth to productivity and capital deepening. Disinflation and fiscal discipline are now the official narrative, and there are early signs that net exports can contribute more sustainably when financing conditions stabilize. But reshoring will not happen on slogans alone. Manufacturers report that cheaper, longer-tenor capital and better labor availability are prerequisites for moving up the value chain at scale.
The immediate playbook looks more technical than political: align carbon policy with Europe before CBAM costs harden; build domestic capacity in key intermediates to reduce import intensity; deploy trade remedies sparingly but consistently against clearly distortive imports; and clarify the regulatory and sanctions landscape with Washington so transatlantic projects become bankable again. Geography still helps Türkiye—sitting between Europe, the Black Sea, and the Middle East—but in the current trade environment, institutions and execution will decide whether investment sticks.
The bottom line is straightforward. Türkiye can still turn trade into a durable engine of growth, but not with the tools of the 1990s. The next gains will come from institutional upgrades, cleaner and smarter production, fewer frictions with key partners, and a manufacturing base that relies less on imported inputs. That is how exports can lift living standards and support financial stability in a world where politics and policy now shape the map of trade as much as markets do.