Perhaps the decision announced earlier this week by Biden to impose a 100 percent tariff on Chinese-made electric vehicles (EVs), to protect US manufacturers from cheaper imports, should come as no shock.

The US has always prioritized the protection of its own economy. And this is a natural continuation of such a policy, along with the trend in deglobalization and the decoupling of the US-China trade relationship.

The move is unlikely to make much of a difference as Trump’s previous tariffs had already closed the door to Chinese EVs. Indeed, Trump has already retaliated with the promise of a 200 percent tariff on EVs if he comes to power.

In addition to the tariff on EVs, Biden also announced that levies will rise from 7.5 percent to 25 percent on lithium batteries, from zero to 25 percent on critical minerals, from 25 percent to 50 percent on solar cells, and from 25 percent to 50 percent on semiconductors. These are all aimed at boosting the growth of the American green technology sector.

Unfortunately, the real victim in all this will be the environment and the move toward a low carbon economy is likely to be greatly affected, particularly in the US.

It is no secret that China had provided some subsidies to its domestic car manufacturers to help develop the EVs we see today. However, domestic competition in China has also played an important role in bringing down prices, not just of EVs, but also of solar panels and batteries.

If China then wants to sell these cheaper products to the rest of the world, which will help reduce the carbon footprint of many of the most polluting industries, then they are effectively subsidizing the global shift toward a lower carbon economy.

Given the difficulties we are already facing in meeting the Paris Objectives, such a move should be welcomed as a boost for humanity. Indeed, most of the middle classes who could otherwise not afford an EV certainly seem happy to be driving a BYD instead.

It is also laughable to think that this will materially enhance the US’ green technology sector. American industry has long given up the know-how in processing critical minerals, for example. Developing such expertise again will take decades and would involve training a whole new cohort of PhD’s, something China has been excelling at.

What it is far more likely to achieve is a material increase in the price of its own domestics EVs as well as for solar panels, batteries and other green inputs. This will inevitably raise the cost of US manufactured EVs and green products, reducing their global competitiveness and delaying its green transition.

The costs will be borne by the US’ middle class, who will also face significant job losses in sectors that rely on those inputs, while protecting a proportionately much smaller number of jobs in its manufacturing sector. Meanwhile, hopefully the rest of the world will ignore the US’s move and continue to benefit from China’s cheap EVs and green transition products.

The move also further undermines the concept of a globalized economy and free trade. Institutions such as the IMF and World Bank are now really going to struggle to persuade other countries to open up their markets and to cut or remove tariffs when the US is doing the exact opposite.

We are seeing an escalation of the same trends that have been on-going over the last decade, except now they are directly impacting the environment. In 2019, I had commented on Mark Carney’s speech on the weakening of the dollar and the end of the rationale for its dominance of the global financial system, along with the implications for other safe haven assets.

In the ensuing five years since, things have only worsened, exacerbated by the ever-growing US national debt, which currently stands at over $34trillion, and increasing by $1trillion every 100 days.

As a result, we have witnessed the strengthening of the call for an alternative BRICS currency; the acceptance of Bitcoin as a global asset that can preserve wealth in times of rapid currency devaluation and high inflationary pressures; and increased central bank gold purchases, pushing gold to an all-time high.

Instead of tackling the underlying issues head-on, we are instead seeing further measures to limit free trade and deglobalize the economy. This will not only hurt financial markets and global growth, but it is now even more apparent than ever that the climate and our natural environment will end up paying the heaviest price.