On Friday, Trump announced he would double aluminum and steel tariffs on the North Atlantic Treaty Organisation ally.
US President Donald Trump dramatically increased the pressure on Turkey on Friday, threatening to double tariffs on the country's aluminium and steel exports, leading to a fresh slump in the already tumbling lira.
"This innocent man of faith should be released immediately", Trump previously wrote on Twitter when it became clear Turkey would not release the evangelist, who was ordered to be held under house arrest.
The New York Times suggested that Trump could also be trying to offset the effects of Turkey's weakened currency on the existing tariffs.
He did not offer an explanation for the tariff hike, which raises the tariffs to 20 percent on aluminum and 50 percent on steel, though there are a couple of possibilities.
Turkish President Tayyip Erdogan has dismissed concerns over the tumbling lira, calling on Turks to "have no worries", after the currency hit record lows in recent weeks on the back of a widening rift with the United States.
"If there is anyone who has dollars or gold under their pillows, they should go exchange it for liras at our banks", he said during an address to supporters.
Turkey's currency plunged to more than six and a half lira against the dollar, a fall of about 20 percent, overnight and into Friday after a Turkish delegation returned from talks in Washington on Thursday with no apparent solutions to the row.
The lira fell as much as 18 per cent against the US dollar in its worst day since Turkey's financial crisis of 2001.
European shares and a gauge of global equity markets closed down more than 1 percent, while Wall Street also fell, though not as much.
On June 21, Turkey's retaliatory tariffs went into effect on 4 to 70 percent of more than $1 billion worth of USA goods.
Paul Greer at Fidelity International said dramatic interventions were now needed as Turkey faced a "downward spiral" of investor confidence. The tech-heavy Nasdaq composite was down 83 points, or 1.1%, poised to end an eight-day winning streak.
While Turkey and the United States are at odds over a host of issues, the most pressing disagreement has been over the detention of US citizens in Turkey, notably Christian pastor Andrew Brunson who is on trial on terrorism charges.
Observers have noted how fighting for Mr Brunson's cause is likely to be popular with Mr Trump's evangelical base ahead of crucial mid-term elections this November. Some 4 million displaced people, most them from Syria, are now living in Turkey.
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. On Friday, he said the country had to take steps in answer "to those who have waged an economic war against us".
The lira, which had traded at 4 to the dollar as late as April, was being quoted at more than 7 to the dollar at one point Friday before rebounding to about 6.4. Further downside for the lira and weakness in domestic bank bonds could accelerate the withdrawal of wholesale funding in an economy which needs to attract overseas capital.