How Environmental Policy Fuels Global Economic Protectionism

How Environmental Policy Fuels Global Economic Protectionism

We have entered a new era of trade wars, but this is not the old era of tariffs; it is an era of environmental and technological standards. At the heart of this new conflict lies the global shift toward clean energy and a green economy. Major powers, particularly the United States and the European Union, are now using their trade policies not only to support their domestic industries but also to undermine their competitors, especially China, in the race to dominate future technologies such as batteries, electric vehicles, and solar panels. The most prominent example of this shift is the US Inflation Reduction Act (IRA), which provides massive tax breaks for companies that produce green technologies within the United States. While its stated aim is to combat climate change, this measure has angered allies in Europe and other partners because it clearly aims to attract foreign investment away from them and uses government support as a tool to weaken foreign competition. The European res…