Mr Trump posted the threat on Twitter as the relationship between the two countries collapses amid the row over the release of America pastor Andrew Brunson, who has been charged with terrorism offences in Turkey.
Mr Trump said on Twitter: “Turkey has taken advantage of the United States for many years.
“They are now holding our wonderful Christian Pastor, who I must now ask to represent our Country as a great patriot hostage.
“We will pay nothing for the release of an innocent man, but we are cutting back on Turkey!”
Mr Brunson has been in prison in Turkey since 2016 and is accused of being involved in the coup against President Tayyip Erdogan.
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Additional US sanctions against Turkey could be imposed if Mr Brunson is not freed.
US treasury secretary Steven Mnuchin yesterday said to Mr Trump that further sanctions are ready to be put in place.
The lira has lost almost 40 per cent of its value against the dollar this year as the feud between Mr Trump and President Erdogan has deepened.
Turkey’s finance minister Berat Albayrak has insisted that the country will come out out the currency crises stronger.
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12:00pm update: China gives support to Turkey
China has spoken out in support of Turkey following the threat of additional US sanctions.
China’s Foreign Ministry said Turkey can “overcome” the economic problems.
It said: “Turkey is an important emerging market country, and it remaining stable and developing benefits regional peace and stability.
“China believes that Turkey has the ability to overcome the temporary economic difficulties, and hopes the relevant sides can ease their differences via dialogue.”