Sacramento, CA — California has made history by surpassing Japan to become the world’s fourth-largest economy, announced Governor Gavin Newsom. This achievement comes as the state faces challenges from President Donald Trump’s tariffs, threatening California’s burgeoning economic prosperity.
The Golden State’s nominal gross domestic product (GDP) reached $4.1 trillion in 2024, outpacing Japan’s $4.02 trillion GDP in the same period. California now ranks only behind the United States, China, and Germany in terms of economic size, with a remarkable 6% growth rate last year.
Governor Newsom highlighted California’s economic success in a news release, stating, “California isn’t just keeping pace with the world — we’re setting the pace.” He attributed the state’s thriving economy to investments in people, sustainability, and a commitment to innovation. However, Newsom also expressed concerns about the detrimental impact of federal tariff policies on California’s economic strength.
The state, home to 40 million residents, represented 14% of the nation’s GDP in 2024. Silicon Valley, along with the real estate and finance sectors, drove California’s economic growth. Governor Newsom recently filed a lawsuit against President Trump over the implementation of tariffs, arguing that they have harmed Californian families and businesses.
The lawsuit challenges Trump’s use of emergency powers to impose tariffs on various countries. Newsom argued that these tariffs have led to disruptions in supply chains, increased costs, and inflicted significant damages on the state’s economy. Furthermore, the governor contended that such unilateral actions require approval from Congress under the International Economic Emergency Powers Act (IEEPA).
California engaged in nearly $675 billion of two-way trade in 2024, with Mexico, Canada, and China as its top trade partners. Over 40% of the state’s imports were sourced from these countries, totaling more than $203 billion out of the $491 billion in total imports. In response to the tariffs, twelve more states joined California in suing the Trump administration for imposing what they deemed as illegal tax hikes through tariffs.
The ongoing legal battle underscores the complexities and implications of trade policies on states’ economies. Despite California’s remarkable economic growth, the threats posed by tariffs highlight the need for a balanced approach to international trade relations. Governor Newsom’s commitment to protecting California’s economy from external risks demonstrates the state’s determination to sustain its position as a global economic powerhouse.