Despite tariffs, Chinese car exports have soared to record levels.
1.1 Million Car Exports in June
Please note China Exports Over One Million Cars per Month Despite Tariffs.
China has exported more than one million cars in a single month for the first time, putting further pressure on Europe’s beleaguered automotive industry.
Chinese car shipments surged to 1.1 million in June, up 71pc from a year earlier, as the Iran war drove up fuel prices and turbocharged demand for electric vehicles (EVs) in Asia and Europe.
Wang Jun, the deputy director of China’s general administration of customs, hailed the figures as confirmation that the country’s “green product offerings” were suited to “the global shift toward green and low-carbon development”.
But the figures will trigger fresh alarm in Europe, where tariffs on cut-price Chinese EVs have failed to stop the likes of BYD, Geely, Chery and Leapmotor eating into the market share of the bloc’s traditional car giants.
The EU has imposed tariffs of up to 35pc on Chinese EV imports. However, Chinese carmakers are either absorbing the tax cost rather than raising prices, or switching to selling hybrid vehicles, which are not covered by the levies.
Chinese cars still account for under 10pc of those sold in Europe, but their market share has almost doubled in a year, according to Schmidt Automotive Research.
The European Commission imposed a tariff on Chinese-made tyres on Tuesday and officials are reportedly considering extending its tariff regime to hybrid cars.
The bloc’s looming “Made in Europe” regime, which mandates that vehicles sold on the Continent be built with 70pc EU parts, may push Chinese carmakers to build more factories in Europe.
China’s total exports jumped 27pc in June to a record high, fuelled by shipments of EVs, semiconductors, computer equipment, ships, batteries and wind turbines.
Brad Setser
Evidence
(if Chinese exports outperform global trade, someone else has to underperform)
Trend is Clear
Volkswagen Planning to Cut up to 100,000 Jobs Gobally
The BBC reports Volkswagen Planning to Cut up to 100,000 Jobs Gobally
The chief executive of the German car giant Volkswagen Group has confirmed it is looking to cut up to 100,000 jobs – twice as many as previously stated.
The group, which includes Porsche, Audi, Seat and Skoda as well as the VW brand, had previously said it would axe some 50,000 posts in Germany by 2030.
It suffered a steep decline in profits last year – the result of falling sales in key markets, as well as increasing competition from Chinese brands moving into Europe.
In a widely-reported memo to staff, chief executive Oliver Blume said the Group’s costs were 20% higher compared to rival businesses, and it would need to reduce its outgoings even further.
“We are currently assessing across all brands, companies and regions how many adjustments are actually necessary and feasible,” he said.
“We need to become more efficient, more robust and simpler. We must reduce our costs.”
He added the company had been “unable to confirm” alternative uses for four factories in Germany which have previously been threatened with closure.
The group has been badly hit by a fall in sales in China, once one of its most lucrative markets. In the first six months of the year they were down 26% compared to last year.
In the US, sales fell more than 7%, in part due to the impact of tariffs on car imports introduced by the Trump administration.
Meanwhile Chinese brands have been moving aggressively onto international markets, introducing new technologies while benefitting from lower production costs than European rivals.
China’s Cars
Cars manufactured in China are cheaper yet better with more features and miles per charge.
In June of last year I reported Ford CEO: China’s EV Costs, Tech, and Quality “Far Superior” to the West
Ford’s affordable EV project faces Chinese competitors with 20 years of experience and intense government backing.
Between the lines: China built massive overcapacity that creates export power.
- The country has 20 million units of domestic demand but 40 million units of manufacturing capacity, meaning they can flood global markets without building additional plants.
- That manufacturing base also gets government support American companies don’t receive.
“We cannot get any high power magnets without China,” Farley said.
“Drivers get in the car and their phone pairs automatically, and an AI companion equivalent to ChatGPT handles everything from navigation to entertainment. The vehicles also have facial recognition that knows which seat someone is in and adjusts media preferences.“
The Western manufacturers do not have that at any price.
Imagine buying a car for about $7,780 or a luxury EV for around $32,800.
Tariffs Cannot Fix the Problem
Trump’s tariffs inhibit innovation. And Trump’s tariffs on Steel and Aluminum are very counterproductive.
Unions costs are a big issue and they will fight the job losses that are guaranteed once the gasoline engine goes away.
But the key problem is lack of a trade enforcement mechanism. Gold provided that.
Fundamental Problem
President Nixon closed the gold redemption window on August 15, 1971. There have been no constraints on fiscal deficits or trade imbalances ever since.
When Nixon removed the gold redemption window, it allowed government expansion of debt at will, creating a reserve currency curse.
US consumers because the world’s consumers of last resort. Initially, Germany took advantage, but now it’s China flooding the world with subsidized exports.
The US is continually forced to choose between recession to slow demand or huge trade and fiscal deficits.
Very few understand the fundamental problem and why tariffs cannot and will not fix these imbalances.
Nixon Shock
I have been writing about the fundamental problem for nearly two decades. Here’s a synopsis from September 2019.
Please consider Nixon Shock, the Reserve Currency Curse, and a Pending Currency Crisis
On August 15, 1971 Nixon directed Connally to suspend, with certain exceptions, the convertibility of the dollar into gold or other reserve assets, ordering the gold window to be closed such that foreign governments could no longer exchange their dollars for gold. He also issued Executive Order 11615, imposing a 90-day freeze on wages and prices in order to counter inflation. This was the first time the U.S. government had enacted wage and price controls since World War II.
The American public believed the government was rescuing them from price gougers and from a foreign-caused exchange crisis. Politically, Nixon’s actions were a great success. The Dow rose 33 points the next day, its biggest daily gain ever at that point, and the New York Times editorial read, “We unhesitatingly applaud the boldness with which the President has moved.”
So Much for Temporary
The move was not temporary. There have not been any restraints on deficit spending since.
Wars became easy to finance. Deficits? No problem.
In 2011, Paul Volcker, who replaced William Miller as Fed Chair in 1979, expressed regret over the abandonment of Bretton Woods.
“Nobody’s in charge,” said Paul Volcker.
Related Posts
June 6, 2026: What Would It Take to End US Dollar Dominance Over Global Transactions?
Let’s discuss the right and the wrong answers.
July 6, 2026: Trump’s Tariffs Did Not Bring Back Manufacturing Jobs. What Will?
On average, tariffs are a jobs killer. They protect one industry while costing others.
July 7, 2026: Goods and Services Trade Deficit Expands 44 Percent to 77.6 Billion
Trump’s tariffs have done nothing to reduce the trade deficit.
If the West doesn’t get its manufacturing back on-shore, there won’t be a West. Strong manufacturing is the foundation of strong national security. WW 1 and 2 made that point very clearly.
meanwhile those China ev cars are looking better: Houthi Leader Threatens Saudi Oil Facilities if Riyadh Escalates in Yemen
https://www.usnews.com/news/world/articles/2026-07-16/houthi-leader-threatens-saudi-oil-facilities-if-riyadh-escalates-in-yemen
The European car industry with European made made cars is on death watch … too many brands too much duplication … and the decline in purchasing of CARS by younger ages … expect mumerous brands from Stellantis to disappear in the next 2 to 5 years … England’s car industry is virtually dead and Germany’s car manufacturing sector is collapsing … just wait until they start producing Porsches in China !!! Europe is a dead man walking ….
Why Jet Engines Aren’t “Made In China”What China’s jet engine program tells us about the limits of industrial policy
https://aakash.substack.com/p/why-jet-engines-arent-made-in-china
If nice Chinese car ever get here and remain viable more than 15 years, I might get one. I only drive old beaters, but am very particular about reliability.
If you are worried about climate change, shouldn’t you be embracing cheap, reliable electric vehicles no matter who builds them?
Batteries store electricity, they do not create it. Where does the electricity come from? At least 60% of it comes from fossil fuels and that is a conservative estimate because solar, wind and hydro contributions to the energy grid fluctuate wildly. Renewable energy sources are heavily subsidized by the Gov. because on there own they are not profitable and the operator/owners of these systems would go bankrupt, as several large “solar farms” have already done.
Where does the energy come from to extract, refine and manufacture the materials and rare earth elements to manufacture these batteries? Where does the energy come from to power the trucks and trains that transport these materials to the point of manufacture? How dependable will the supply chains that these rare earth materials need to travel be in the future? When will charging stations become as accessible and common as current gas stations are? How long will the antiquated electrical grid in this country be able to supply the demand of EV use and data center buildout?
The four laws of thermodynamics tells us that there is no such thing as a free lunch and nobody gets out of here alive.
How does burning natural gas (the main fuel for power generation in the US) at utility scale to generate electricity compare to burning diesel or gasoline in millions of individual vehicles? How about nuclear? It seems like an awful lot of useful things can be made from petroleum- does it make sense to be burning it willy-nilly to get from point A to point B?
Pretty sure it’s a fact that running an EV from natural gas supply is significantly more efficient use of energy than burning gasoline in an ICE (which are like 25% efficient if you’re lucky.) It certainly produces less pollution.
An ICE is an air pump supplemented with gasoline (~14.6:1). Modern engines do a great job of trimming this lower while at idle. Still, so many autos idling. A combined cycle natural gas plant is “in the money” these days, even in my state of Washington where we once had abundant hydro…and sadly continue to build data centers.
I’m all for water-moderated nuclear. The US built the Ohio (SSBN-776) in the ’70s. It ran ~24 years on primary mission. It continues to serve (without refueling) using a reactor that would physically fit inside your first home (I know, I’ve been in the compartment on SSBN-731). So, the cost effectiveness can’t possibly pencil out for public consumption, but 50 years of learning and improving has to account for something?
Bolster combined cycle natural for the interim. Subsidize grid hardening. Build nuclear now.
We’d need a campaign to promote unity and logic…therein lies the rub.
Its always this binary choice with energy policy. Real energy policy considers free energy from wind, solar, tidal, hydro when it can get it. Nat gas is clean and plentiful and can be used at night. Nuclear is another high density fuel source we keep assuming is stuck in 1970s. Greenies ignore that renewables are unreliable. Rightwingers assume because its unreliable we have to burn fossils until we run out. All are 1diots
Zeroth Law: If two systems are each in thermal equilibrium with a third system, then they are in thermal equilibrium with each other. “OK, good starting point!
First Law: Energy cannot be created or destroyed, only transformed from one form to another. This law is often expressed as the principle of conservation of energy “Hmmm, if accepted, what transfer yields the best bang for your buck?”
Second Law: In any energy transfer, there will always be a loss of usable energy, often in the form of heat, leading to an increase in entropy. “Kinda boring, but relevant! What if you capture the heat”?
Third Law: As the temperature of a system approaches absolute zero, the entropy of a perfect crystal approaches zero. “Yawner”!
I’ve said this before, but Nixon had no choice but to close the gold window. The problem was the most fundamental world trade imbalance: oil. US oil production was projected to be in rapid decline and the US would have to import more and more oil. At the same time, Europe and Japan were outcompeting American industry all over the world, making US exports weaker. Nixon had a choice: close the gold window, increase deficits and export debt, or keep the gold window, watch oil prices go through the roof, let Democrats win the next election and have them close the gold window. Regardless, the gold window would be closed.
It is important for people to understand that if implementing your economic fetishes make peoples lives poorer, they are going to get dropped at some point.
I wouldn’t characterize a 10% drop in US oil production from 1971 to 1980 as a rapid decline. And as for making people’s lives poorer, I’m sure that the onslaught of double digit inflation was the main contributor. COLA’s for SS didn’t even exist until 1975 when the seniors woke up and saw the ripoff every year.
It is time to admit that the economic policies being pursued by China are superior in creating growth and advancement than traditional American free-market economics. We can’t rely upon Ford, GM and Dodge to compete on the world markets against their Chinese counterparts, nor probably any manufacturer. And worse, we aren’t going to course correct. We aren’t going to learn what the Chinese to do right and adopt it to our own systems. Just slowly become less relevant and poorer.
The economic policies being pursued by China have fatal flaws of their own. Don’t overstate it. Their per capita GDP is less than 1/6 of ours. Their real estate market is crashed, they are fighting deflation in their domestic market, they have high government debt, they have a population crisis looming. Fundamentally a command economy will only work until it doesn’t. It doesn’t justify US corrupt and stupid oligarchy, insider dealing, etc. But it’s not all wine and roses or whatever.
There won’t be any Volkswagen layoffs in Germany proper. That’s because the local government has a veto over such things and while the company can propose layoffs they always get vetoed. So they can only layoff outside Germany or sell parts of the company.
https://driving.ca/column/motor-mouth/volkswagen-ag-group-blume-layoffs-factory-close-lamborghini-ducati
The local government is paid for VW and it servers the interests of the oligarchy. In Germany, in the US or anywhere in the world.
It’s mysteriously never mentioned the other reason Chinese cars are taking off: modern western cars suck. Nearly 100k for anything at all off the lot, and what you’re buying is a plastic piece of garbage “luxury” car that genuinely thinks you should pay a MONTHLY SUBSCRIPTION for access to the heated seats in the car you bought.
Automakers have had the market captive for so long they can’t seem to comprehend the idea of competition, so they don’t understand why customers don’t want a car that nickel and dimes them. It’s a microcosm of every western company on some level. All of them have had a captive market they’ve wrung for cash with vastly inferior products compared to what was being made 25 years ago.
The West looks more and more like one gigantic USSR by the day, compete with shitty Lada cars and state approved wrist watches (now phones). The only difference? The USSR did that to keep prices low, in America the companies do it to squeeze the people.
I’ve said this before and I’ll say it a million times more: capitalism requires competition. Instead of that America has been veering towards a system of corporate feudalism for years. Every industry is a handful of companies and their subdivisions, none of those companies are allowed to go bankrupt at the taxpayer’s expense, and consumer “choice” is essentially your pick between two exploitative companies for any given thing. Innovation is crushed and bought out by hedge funds to be stripped for parts, so no new competition can be brought.
Given this reality, I fail to see how this is any different from the exact economic model that killed the USSR dead, just with state involvement more obscured.
Dunno what you drive but my 2024 car is VASTLY superior to what I was driving in 2001. Also my car doesn’t have a monthly subscription to my seats or anything else beyond Sirius Satellite radio.
Auto Makers make what consumers want. There are countless countries all over the world making cars for the market here. The fact they are ‘all the same’ says consumers here want that.
If you think those Chinese cars aren’t loaded with plastic parts you are dreaming.
China’s doing the world a huge favour in helping to break the abusive relationship with the oil industry.
The next massive vehicle export trend from China will be EV trucks.
Here’s what we’ll see soon. (Video shows China to China ship transport)
https://www.youtube.com/watch?v=VfXAdpM1-6k
Explain to us why you think this.
Here is Ford’s explanation why they discontinued production of the F150 Lightning after barely three years:
“The American consumer is speaking clearly and they want the benefits of electrification like instant torque and mobile power,” said Andrew Frick, the president of Ford Blue and Ford model e, the company’s commercial and electric divisions. He spoke to reporters on a call on Monday. “But they also demand affordability … rather than spending billions more on large EVs that now have no path to profitability, we are allocating that money into higher-returning areas.”
IMO, Chinese auto manufacturing is willing to lose money/profitability in order to dominate a market because the CCP will subsidize their losses. That shit doesn’t fly in this country. Plus, the typical consumers for trucks in this country aren’t going for something that will drain battery power at unpredictable rates pulling or carrying a load.
Electric trucks? In THIS country? That’s like non alcoholic beer or decaffeinated coffee or having sex with a condom.
Realistically, most Legacy Auto has to go.
They’re not going to make it trying to keep one foot in the grave & the other in the future.
The future of the auto industry belongs to China.
They’re the ones making all the innovations & pushing forward.
They had the foresight to see electric is the way to go.
The price of Chinese EVs will continue to drop well below ICE.
Australia is now up to about 50% new cars sales EV.
Australia has a huge advantage that anyone in the world can sell cars there duty free.
Give car buyers freedom & eventually most will choose electric.
Waiting for the chorus:
Are we talking about China or America?
He’s obviously out of touch with top bureaucrat Ursula Fond of Lying or top Nazi clown Herr Merz: Waffen
Toyota and Honda execs have already publicly admitted that if Chinese vehicles saturate the US market it is game over for them
That’s correct. Because even if they 100% replicate the Chinese car features they can’t do it for the same price because of labor cost differences.
Automation is huge, Chinese factories have just a few employees per 10k sf checking on the robots. Here in the US even the Japanese carmakers are way behind. I worked in logistics for 10 years for a Toyota supplier and they are just now getting robots and planning on more, but they have to be imported from Spain and Trump hates Spain so that means all of those plans are in limbo
But in Japan that’s not the case and a lot of their cars are made there.
I only know about Toyota, all North American Toyotas are made in US, Canada, and Mexico
This is not true. A simple google search for which Toyota that are made in Japan and sold here will show you several models.
In addition many of the parts are made there, shipped here just for assembly purposes. But even Japan’s wages and Robots are much more expensive than Chinas.
Yes, China can replace all US (and foreign) autoworkers. And you think this is a good thing?
I’m still bitter about losing my job at the local buggy whip manufacturer.
Mish didn’t say it was a good thing. The rise of China’s auto industry is worth noting.
Yes, it is, because we get to buy better and more advanced vehicles this way.
PS: I never bought a Usonian vehicle in this century; utter crap.
But the tradeoff is you then get to pay more in taxes to support millions of new people on welfare when those auto workers are no longer doing any work here (and no, most can’t be retrained to do anything else meaningful beyond Walmart greeter or Uber driver).
We are already paying through the nose in taxes. Too bad that it’s used for the welfare of corporations, not of we the people. Then again, we voted for this.
Chinese don’t deserve jobs?
Speaking of China…..China more popular around world than US.
https://www.washingtonpost.com/world/2026/07/15/china-has-become-more-popular-than-us-much-world-pew-finds/
People view China more favorably than the United States in countries across six continents, a stark shift seen in recent years as perceptions of the U.S. sour, according to findings by Pew Research Center.
Also more popular than the US… herpes.
In US dollars, Chinese auto workers make $11,000 to $15,000 annually. Workers rely heavily on overtime pay to have a somewhat decent quality of life. Independent trade unions are illegal in China. There is one state controlled labor union (ACFTU). Workers in this union do not have the legal right to strike. Instead it’s focus is on “safety” and solving worker “complaints”.
“Wildcat” strikes are dealt with harshly, usually by the military. Say hello to prison and maybe goodbye to your life. China has no problem dumping factory waste onto the ground and into the water and atmosphere. China is expert at deconstructing technology and methods from other country’s R&D, plus they literally steal and/or pay for existing secret technology from competitors. Thanks Clinton!
China has manufacturing advantages over the rest of the world, mainly saving on R&D, so it is no surprise to me that they can come up with products like cars, military weapons, AI, etc. that are eventually equal to and/or superior and is a fraction of the cost of what it is copying.
I don’t disagree. According to Wiki,Chinese nominal per capita GDP is $14,874, but per capita purchasing-power-parity GDP is $31,596. Not yet equivalent to US but headed in the right direction. No wonder Chinese have an overall positive opinion of their government.
The trope about no R&D in China is ignorant. Tesla can only dream of the batteries used in Chinese cars, that’s R&D. Most of the patents in 5G are by Huawei, that’s R&D. A Nobel Prize laureate chemist moved from Berkeley to Beijing, because of R&D.
There is a learning curve that comes with a base theory or technique. China takes a previously existing idea or theory and goes from there. I’m not extolling the virtues of China. It copies and improves with exponentially less restrictions of all kinds to deal with. It has made breakthroughs in existing technologies. If you want to call that “R&D” go ahead. It did not invent batteries or computer chips or radios or televisions or micro waves or discover the presence of electrical current. That is all I’m saying.
Why can China produce and sell products at a price that undercuts everyone else? Is that R&D or the ability and willingness to operate with no regards to human life or environment?
Name a technology or technological theory that China has come up with from scratch the last 100 years.
Every invention stands on the shoulders of those that came before. American researchers, almost entirely paid for by the US taxpayer, have come up with some of the most profound inventions in common use today. The question is: why didn’t American companies take those inventions and change the world with them? Why are the Chinese capable and Americans not?
#1 reason? Labor unions.
They are a relic from the past, originally created to prevent children from working in factories and blatantly dangerous working conditions.
Now they are mafia run wage extraction cartels. There are thousands of pages of federal, state, county and city laws to protect workers from their God Damn feelings being hurt!
Unions are useless and a gigantic anchor around the neck of manufacturing in this country.
Maybe if Dow Chemical hadn’t stolen the IP from Bayer when the US did not recognize foreign IP, it wouldn’t have become what it is and even create new technology. China is merely copying the formula used by Switzerland, the US, Japan, etc.
You’re making my point for me. They are copy cats. The countries you mentioned actually invent things.
I will also add that China hasn’t invented anything since gunpowder,,, and that’s debatable.
Your reading comprehension is debatable.
They are waging economic war. Normally free market capitalism allows those with a geniune competitive advantage to win. This is not what is going on. Their goal is to dominate and destroy us econoimcally. This cannot go on and I know tariffs are only a blunt instrument. We need to evolve somehow to deal with this intelligently . I know our UAW makes it so cars are unaffordable now and that also needs to change. Not sure what the solution is. No one seems to think to far ahead.
To sell in US market, build the Chinese car factories in US? I don’t claim extensive knowledge here, but Honda and Toyota do it. Offer a “reasonable” wage and benefit package. Include apprentice-like training that allows folks to advance. Will the Chinese autos still be competitive?
free yearly testosterone shots for those buying the Ford/Ram/GMC gas guuzzlers– those pussy-ass electrics will never sell
Secretary Hegsdeath? Is that you?
Hegsdeath wants testosterone tests for US military to make sure they’re ready to fight. Next they’ll get ‘roids and Captagon to make sure no remnant of conscience, compassion or reason remains. I think Pete is subtly admitting he’s on T replacement therapy. C’mon Pete – let’s see 100 pushups. You can do it.
Testosterone is a one way street. Once soldiers are on it, they will need to remain on it for the rest of their life. The body stops all production after a few weeks. Testosterone will need to be included in MREs as stopping usage will quickly have adverse effects.
Wouldn’t that be the secret ultimate goal? Once they stop producing testosterone they’ll become very docile and much easier to control.
Remember when Republicans were panicking about HRT in the military? I bet they didn’t think their glorious unwoke leader would make HRT mandatory.
Is it still woke lunacy or does that only apply when it’s not completely batshit nuts?
BYD can take Toyota’s crown without the US market, says top executive
https://archive.ph/20260715053656/https://www.ft.com/content/ee2919bc-d6f3-4e07-b823-983265b0b8f9#selection-1431.0-1431.69