As the return of the global trade war looms over the second half of 2025, the US’s traditional trading partners are rushing to strike trade deals to avoid the brunt of the tariff damage. Conversely, a handful of countries, most notably Turkey, might be in a more advantageous position than most. How can Turkey make the most of shifting global supply chains in a new, tariff-ridden world?
As the world braces for the extended 1 August deadline for many of U.S. President Donald J. Trump’s sweeping tariffs to be reintroduced, global supply chains will likely be thrown into uncertainty once again. As a result, manufacturers and exporters around the world will have to consider relocating, or at least redirecting, their products bound for the U.S. While much of the focus has been on the risks these new trade measures pose to China, Mexico, Canada, the European Union, and, ironically, the U.S., Turkey may occupy a different – and potentially advantageous – position, given its relatively lenient tariff rate, coupled with its strategic geographical location and increasingly transactional and non-aligned geopolitical stance under President Recep T. Erdogan.
With only a baseline 10% tariff applied across most sectors, excluding automotive and steel, Turkey stands to emerge as a relatively attractive alternative for U.S. importers and multinational companies seeking to circumvent punitive import tariffs from traditional trading partners such as China and the European Union, if indeed Trump’s tariffs are here to stay. Beyond immediate disruptions, this shift could reshape Turkey’s export economy over the coming years, creating new growth opportunities in sectors such as chemicals, furniture, textiles, and electronics. Understanding where these opportunities lie – and what risks persist – will be critical for investors, exporters and businesses considering entering the Turkish market amid shifting global trade routes.
Trump’s Tariff Landscape
President Trump’s 2 April 2025 ‘Liberation Day’ announcement revealed sweeping new tariffs on the U.S.’s closest trading partners, including a 55% levy on China (which has fluctuated between 10% and 145% during the tit-for-tat trade war that followed suit) and 30% on the EU, which has been in the process of negotiations for months. Notably, Turkey has managed to escape the worst of the trade threats, with only the baseline 10% tariffs imposed on exports to the U.S., alongside other emerging economies including Argentina and the United Arab Emirates.
Turkey’s 10% tariff rate has raised hopes among Turkish business figures and economists that the country could exploit the new global trade environment by becoming an alternative base for manufacturing and exporting products, if more highly tariffed countries, most notably China, choose to open factories there. Turkey, which already exports primary components for automobiles, appliances, and electronics to the EU, could also stand to benefit from a redirected flow of these goods, if it invests in capacity-building at home.
Turkey as an intermediary for European exporters
Currently, the level of Turkish goods and services exported to the EU massively overshadows Turkish exports to the U.S. However, many of these Europe-bound goods include components for manufacturing automobiles, appliances, and electronics, many of which are used for final products bound for the U.S. Therefore, the main immediate negative effect facing Turkey, as of 1 August 2025, would be reduced competitiveness for these intermediate goods supplied to the EU for final products to be exported to the U.S., which are, at the time of writing, subject to a 30% tariff.
However, with supply chains likely about to be once again overhauled and redrawn in response to Trump’s new trade policies, Turkey finds itself in a potentially strong and unique position to shift itself down the supply chain and rebrand itself as a destination for final products to be manufactured and exported to the U.S., rather than a transit point for intermediate goods. Turkey also has the benefit of warm relationship between Presidents Trump and Erdogan, versus the seemingly less conciliatory treatment Trump prefers to give the U.S.’s traditionally closer allies, including the EU.
Turkey as an intermediary for Chinese exporters
This situation, coupled with Turkey’s increasingly transactional and non-aligned relationships with the rest of the world, presents a strategic opportunity to attract investment from China and the EU in order to circumvent expensive rates on exports to the U.S. Whether or not Turkey benefits from the new global trade landscape depends on its approach to developing its manufacturing and export sectors, and its ability to attract foreign investment. Currently, even considering indirect trade through third countries, exposure to U.S. demand constitutes less than 2% of Turkey’s GDP, according to Selva Bahar Baziki, an economist at Bloomberg Economics in Ankara. Turkey would have to adopt an ambitious new strategy in order to make the most of its new opportunities.
If Turkey offers a suitably attractive investment environment, while focusing on developing its transactional relationships with the U.S., the EU, and China, it could stand to benefit from Chinese investment, reorganised European supply chains and a friendly trade relationship with the U.S., potentially offering a mutually beneficial alternative to traditional, tariff-ridden supply chain networks.
Which Sectors Stand to Benefit?
The intensification of Trump’s tariff war could enable Turkey to gain market share in the U.S. in sectors such as chemicals, cars, furniture, and electronics. Turkey’s largest exports to the U.S. include chemicals, automotive parts, clothing, carpets, and electronics. It imports most of its cotton from the U.S. – for clothing that then ends up being exported back to that country. Although a baseline tariff of 25% on most foreign-made vehicle parts is already in effect, Trump’s threatened 30% tariffs against the EU and the lack of progress regarding a U.S.-EU trade deal could increase the visibility of Turkish final products and, in turn, shift the European auto supply chain to redirect final vehicle production to Turkey.
On the Chinese front, if Turkey can step in as an alternative intermediary to Vietnam and Cambodia, it could brand itself as an attractive hub for Chinese textile production and export. This could offer Turkey the potential for a highly diversified export economy. However, in both cases, such opportunities can only be turned into realities if Turkey sufficiently prepares its export capacities by investing heavily in automotive manufacturing plants, logistics hubs, warehouses, and skilled labour.
Takeaways
As global trade dynamics shift under Trump’s protectionist policies, Turkey’s position as a relatively low-risk and potentially cost-competitive export hub offers a window of opportunity – one that will require strategic navigation by Turkish businesses and foreign investors alike. If Turkey creates an attractive environment for investment by diversifying its export economy and investing in its logistical capacity, it could position itself as an increasingly important player in the evolving global supply chain landscape. Businesses and investors who move early to understand and capitalise on these opportunities with Turkish counterparts could be well-positioned to benefit from Turkey’s export potential in the coming years.
This analysis is a contribution made by Patrick Newell, Analyst at SET Advisory.