Donald Trump has imposed sanctions against senior members of Turkey’s government in response to their offensive against the Kurds in Syria, and will keep "a small footprint" of US troops in the country.
The US president said that steel tariffs would be increased to 50 per cent and negotiations over a $100 billion trade deal would be put on hold.
He signed the executive order imposing the sanctions on Monday night.
He said: "The situation in and in relation to Syria, and in particular the recent actions by the Government of Turkey to conduct a military offensive into northeast Syria, undermines the campaign to defeat the Islamic State of Iraq and Syria, or ISIS, endangers civilians, and further threatens to undermine the peace, security, and stability in the region, and thereby constitutes an unusual and extraordinary threat to the national security and foreign policy of the United States."
Earlier, in a statement announcing the forthcoming sanctions, Mr Trump said: "I have been perfectly clear with President Erdogan: Turkey’s action is precipitating a humanitarian crisis and setting conditions for possible war crimes.
Read more | Syria crisis
"Unfortunately, Turkey does not appear to be mitigating the humanitarian effects of its invasion."
Mr Trump effectively authorised the invasion on October 6 when he announced that US troops were being pulled out of the Turkey-Syria border region.
On October 9 Turkish troops rolled into north eastern Syria.
In the past five days, Turkish troops and their allies have pushed into northern towns and villages, clashing with the Kurdish fighters over a stretch of 125 miles. The offensive has displaced at least 130,000 people.
Mr Trump stressed repeatedly that US troops were not in the region, but on October 11 reports emerged of US special forces coming under fire in the contested territory.
His defence secretary, Mark Esper, then said on Sunday that all US troops were being withdrawn from Syria.
A day later Mr Trump contradicted him, saying that "a small footprint" of US troops would remain in the country, based at the At Tanf garrison in the south of the country.
He also said that troops coming out of Syria "will now redeploy and remain in the region to monitor the situation," without elaborating.
The US president said that the executive order punishes Turkey for excessive use of force.
"This Order will enable the United States to impose powerful additional sanctions on those who may be involved in serious human rights abuses, obstructing a ceasefire, preventing displaced persons from returning home, forcibly repatriating refugees, or threatening the peace, security, or stability in Syria," the White House said in a statement.
Turkish officials will face "a broad range of consequences," the White House said, "including financial sanctions, the blocking of property, and barring entry into the United States."
Mr Trump had come under pressure from both Republicans and Democrats to impose sanctions on Turkey for the offensive.
Lindsey Graham, the South Carolina senator who is one of the president’s staunchest supporters, tweeted on Sunday that he had convinced Mr Trump of the need for sanctions.
Plight of the Kurds | Timeline of Western involvement
"Just spoke with President
@realdonaldTrump. I applaud his decision to work with Congress to stop Turkeys aggression in Syria through crippling economic sanctions. This decision by President Trump will be a game changer — in all the wrong ways — for Turkey."
On Monday he said he was "working across party lines in a bicameral fashion to draft sanctions and move quickly, appreciating President Trump’s willingness to work with the Congress."
Mr Trump said that the US will "aggressively use economic sanctions to target those who enable, facilitate, and finance these heinous acts in Syria."
He added: "I am fully prepared to swiftly destroy Turkey’s economy if Turkish leaders continue down this dangerous and destructive path."