As Turkey's government sought to reassure markets after the lira had been sent into a tailspin by the deepening spat, Washington said the next raft of sanctions could be on the way.
US Treasury Secretary Steven Mnuchin warned Thursday that the United States would impose more sanctions unless pastor Andrew Brunson, described by US President Donald Trump as a "hostage", was released.
Turkey's Trade Minister Ruhsar Pekcan responded to the new threat on Friday.
"We've already responded based on the World Trade Organization rules and will continue to do so," Pekcan was quoted as saying by the state-run Anadolu news agency.
Brunson's detention since October 2016 on terror-related charges has soured relations between the two NATO allies and sent the lira tumbling.
The lira, which earlier this week traded at well over seven to the dollar, had rebounded slightly over the last three days but on Friday it lost nearly five percent of its value and was quoted at 6.1 against the dollar.
It has lost nearly 40 percent of its value against the dollar this year, hit by both the diplomatic rift and investor alarm about President Tayyip Erdogan’s influence over monetary policy. Erdogan, a self-described “enemy of interest rates”, wants to lower borrowing costs despite high inflation.
Trump on Thursday tweeted: "Turkey has taken advantage of the United States for many years. They are now holding our wonderful Christian Pastor … as a great patriot hostage."
He said: "We will pay nothing for the release of an innocent man, but we are cutting back on Turkey!"
The latest US announcement came after Turkish Finance Minister Berat Albayrak, the son-in-law of Erdogan, sought to soothe markets during an unprecedented teleconference on Thursday with hundreds of foreign investors from the United States, Europe to Asia.
He said Turkey would emerge "stronger" from the currency crisis and ruled out an IMF bailout.
Analysts say sharp hike in interest rates is needed to stop the declining value of lira, but Erdogan's government is opposed to any rate hike in order to stimulate growth.
Last week, Trump tweeted that his administration was doubling aluminum and steel tariffs for Turkey, which promoted Ankara to sharply hike tariffs on some US products.
Erdogan has remained defiant in the face of the crisis with Washington, saying Turkey could turn to new alternative markets.
AFP and Reuters contributed to this story.