- April 8, 2025
- Posted by: admin
- Category: Blog
Introduction
The recent decision by the United States to impose additional tariffs as of April 2025 on a wide range of countries—including China, India, Russia, and even the European Union—has significantly reshaped global trade dynamics. Amid these sweeping tariff increases, Turkey stands out with surprisingly low or no additional tariffs on most exports to the U.S. This favorable position opens a lucrative window of opportunity for foreign investors, manufacturers, and entrepreneurs who are seeking to relocate or establish production hubs that remain competitive in the U.S. market.
With its strategic geographical location, cost-effective labor force, customs union with the European Union, and robust infrastructure, Manufacturing in Turkey is emerging as an attractive alternative for manufacturing and export operations. In this article, we will explore the reasons why foreign investors should consider company formation in Turkey, the benefits of setting up a factory in Turkey, and how these investments can help businesses gain a competitive edge in global markets.
1. Understanding the U.S. Tariff Shift and Turkey’s Advantage
The U.S. has recently increased tariffs on several imported goods from countries like China, Vietnam, and EU member states, aiming to encourage domestic production and protect American industries. However, in a notable exception, Turkey has not been significantly affected by these changes. In many sectors—including textiles, electronics, machinery, and plastics—exports from Turkey to the U.S. continue to enjoy lower duty rates compared to those from competing nations.
This has created a unique competitive advantage for Turkish-manufactured goods in the U.S. market. For foreign investors, this means that producing in Turkey can significantly reduce export costs and increase profit margins when selling to the U.S.
2. Why Foreign Investors Should Consider Manufacturing in Turkey
a. Strategic Location
Turkey serves as a natural bridge between Europe, Asia, and the Middle East. Its location provides access to over 1.5 billion customers across Europe, North Africa, Central Asia, and the Middle East. This makes Turkey an ideal base for companies aiming to serve multiple markets efficiently.
b. Customs Union with the EU
Although not an EU member, Turkey is part of the EU Customs Union for industrial goods. This allows products manufactured in Turkey to be exported to the EU without additional customs duties—an enormous advantage for international companies looking to bypass high EU tariffs and complex trade regulations.
c. Skilled and Competitive Workforce
Turkey boasts a large, young, and educated labor force. The cost of labor remains highly competitive compared to other manufacturing hubs like Eastern Europe or China. Many global companies such as Ford, Toyota, and Bosch already have long-standing manufacturing operations in Turkey for this reason.
d. Strong Infrastructure
Turkey has invested heavily in modern infrastructure including highways, ports, and logistics hubs. The country is also home to several organized industrial zones (OIZs), which provide ready-to-use industrial land, tax incentives, and streamlined bureaucratic processes for factory setup.
3. Legal Framework for Company Formation in Turkey
Setting up a business in Turkey is relatively straightforward, especially for foreign investors. Here are the key steps involved:
a. Choosing the Right Company Type
Most foreign investors opt for one of the following structures:
Limited Liability Company (LLC): Most common and suitable for small to mid-sized enterprises.
Joint Stock Company (JSC): Ideal for larger enterprises and those looking to go public.
b. Required Documents and Registration Process
Notarized copies of passports for shareholders and directors.
Articles of Association.
Tax registration.
Trade registry application.
With the help of an experienced consultancy, company formation in Turkey can be completed in as little as 1 week.
c. Foreign Ownership Allowed
Turkey allows 100% foreign ownership in most sectors. There are no restrictions on repatriating profits, and foreign investors have the same rights as Turkish citizens in terms of business operations.
4. Factory Setup and Industrial Investment Opportunities
Turkey offers multiple incentives for factory establishment, especially in the following sectors:
Automotive and parts manufacturing
Textiles and garments
Electronics and consumer goods
Plastics and packaging
Food processing and agriculture
a. Organized Industrial Zones (OIZs)
Turkey has over 300 OIZs across its territory. These zones offer:
Ready infrastructure (electricity, water, gas)
Lower land prices
Tax reductions and incentives
Streamlined licensing
b. Investment Incentives Program
The Turkish government offers various incentive packages including:
VAT exemptions
Customs duty exemptions
Land allocation
Social security premium support
Income tax reductions
These are especially available for investments in technology, export-oriented production, and high-value-added sectors.
5. Exporting from Turkey to the U.S. and Other Markets
a. Favorable U.S. Tariffs
As mentioned, U.S. customs duties on Turkish products remain significantly lower than those on goods from China, the EU, and others. For exporters in textiles, machinery, and plastic packaging, this is a significant advantage.
b. Access to Free Trade Agreements
Turkey has free trade agreements with over 20 countries, including important markets like the EFTA countries (Switzerland, Norway, etc.), Malaysia, and South Korea. This enhances its value as a production hub for global exports.
c. Developed Logistics and Port Access
With major ports such as Mersin, Izmir, and Istanbul, Turkey offers efficient maritime logistics for fast shipping to the U.S., EU, and other regions.
6. Case Study: Plastic Packaging Production in Turkey
Let’s consider a specific example. A European company producing BOPP (Biaxially Oriented Polypropylene) film faces high EU production costs and new U.S. tariffs on EU imports.
By relocating production to Turkey, the company benefits from:
Lower production costs
Access to OIZs with modern facilities
Lower customs duties when exporting to the U.S.
Possibility of selling to both EU and U.S. markets from a single hub
This allows the company to remain price-competitive globally while benefiting from Turkish incentives.
7. Challenges and Considerations
While the opportunities are vast, foreign investors should also be aware of:
Currency volatility: The Turkish lira can fluctuate, affecting import costs.
Bureaucracy: Although improving, certain licenses and approvals can be time-consuming without professional guidance.
Local partnerships: Building good relationships with local suppliers, government offices, and banks is crucial.
Having a reliable local consultancy firm can help navigate these challenges with ease.
8. How FO Consultancy Can Help
At FO Consultancy, we specialize in:
Company formation in Turkey
Factory setup and industrial zone guidance
Legal, tax, and accounting compliance
Work permits and residence applications
Bank account opening for foreigners
Customs and export assistance
Our multilingual team helps investors from around the world start and scale their operations in Turkey quickly and cost-effectively.
Conclusion
As global trade dynamics shift due to geopolitical tensions and protectionist policies, Turkey has emerged as a haven for manufacturers and investors seeking access to U.S. and EU markets without the burden of high tariffs. The country’s unique position in global supply chains, combined with favorable incentives and infrastructure, makes manufacturing in Turkey an attractive and strategic option for international businesses.
If you are considering expanding your business or setting up a new production facility abroad, now is the ideal time to explore investment opportunities in Turkey. Contact FO Consultancy today to schedule a free consultation and learn how we can help you enter the Turkish market smoothly.
