In a significant economic milestone, California has overtaken Japan to become the fourth-largest economy globally. According to the latest data from the International Monetary Fund (IMF) and the US Bureau of Economic Analysis (BEA), the Golden State’s nominal GDP reached $4.1 trillion in 2024, narrowly edging out Japan’s $4.02 trillion.
This shift places the West Coast powerhouse behind only the United States, China, and Germany. Governor Gavin Newsom heralded this achievement, attributing the state’s success to its investment in innovation, sustainability, and people.
However, this triumph is tempered by concerns over the potential threat posed by President Donald Trump’s tariff policies, which Newsom claims could undermine California’s economic momentum.
California’s Growth Outpaces Major Economies
California’s economic performance in 2024 has been remarkable, with the state registering a 6% growth rate.
This expansion outpaced the growth of the United States (5.3%), China (2.6%), and Germany (2.9%), solidifying California‘s position as a powerful economic force. Notably, this growth is driven by the state’s dominance in the technology, entertainment, manufacturing, and agriculture sectors.
Silicon Valley remains the global hub for technological innovation, while California’s agricultural output is unrivalled in the United States. Governor Newsom has emphasized that California’s economic success is rooted in long-term investments that prioritize innovation and sustainability.
The state’s ability to maintain such growth amidst global economic uncertainties is a testament to its diverse and resilient economic base. With a population nearing 40 million, California remains a critical contributor to the national economy, accounting for 14% of the US GDP in 2024.
Tariffs and Legal Challenges
Despite this growth, Governor Newsom has raised alarms about the negative impact of President Trump’s tariff policies. Newsom, who has filed a lawsuit challenging the legality of the tariffs, argues that these levies, which affect imports from countries like China, Mexico, and Canada, are detrimental to California’s businesses and consumers.
According to Newsom’s office, these tariffs have disrupted supply chains, increased costs, and caused billions of dollars in losses to the state’s economy.
The legal dispute over tariffs underscores a wider clash between the state policies of the Golden State and the federal government. While Newsom champions a global trade approach that safeguards the region’s economic interests, the Trump administration’s forceful tariff policy seeks to reinstate manufacturing within the United States.
Newsom’s lawsuit argues that such extensive use of emergency powers to impose tariffs is unlawful and lacks Congressional approval, making it a critical point of contention in the ongoing debate over trade policy.
