Key Takeaways:
- California has overtaken Japan to become the world’s fourth-largest economy, with a GDP of $4.1 trillion in 2024.
- Governor Newsom praised the state’s innovation-driven growth but warned of threats posed by federal tariffs.
- California has filed a lawsuit against the Trump administration, arguing its tariff policy is unconstitutional and harmful to the state.
California has officially surpassed Japan to become the fourth-largest economy in the world, according to newly released data from the International Monetary Fund (IMF) and the U.S. Bureau of Economic Analysis. The Golden State’s nominal gross domestic product (GDP) reached $4.1 trillion in 2024, edging past Japan’s $4.02 trillion.
Only the United States, China, and Germany now rank ahead of California on the global economic stage. The milestone was heralded by Governor Gavin Newsom, who cited the state’s emphasis on innovation, sustainability, and inclusive economic policies as key drivers of its success.
Strong Growth Amid Economic Headwinds
California’s economy grew by 6% last year, outpacing the U.S. national growth rate of 5.3% and significantly exceeding that of China and Germany. With nearly 40 million residents, California is a global hub for technology, entertainment, agriculture, and manufacturing. The state also hosts two of the country’s busiest ports, further cementing its economic importance.
“California isn’t just keeping pace with the world — we’re setting the pace,” Newsom said in a press statement. “Our economy is thriving because we invest in people, prioritize sustainability, and believe in the power of innovation.”
Despite the positive news, Newsom cautioned that California’s growth could be jeopardized by President Donald Trump’s aggressive tariff policies. He noted that the new levies have disrupted supply chains, raised costs for consumers, and harmed California’s vital trade relationships, particularly with Mexico, Canada, and China.
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Legal Battle Over Tariffs
Last week, California became the first state to file a lawsuit against the Trump administration’s use of emergency powers to impose sweeping tariffs. The legal complaint argues that the tariffs — which include a 10% blanket levy on imports and specific surcharges up to 145% on Chinese goods — violate constitutional provisions reserving tariff authority to Congress.
“No state is poised to lose more than California,” Newsom said during a press conference announcing the lawsuit. “These tariffs represent a direct threat to our economy, our workers, and our values.”
California accounted for 14% of the U.S. GDP last year and engaged in over $675 billion in two-way trade, underscoring the stakes involved in the ongoing trade dispute.
As the legal battle unfolds, California’s economic ascent adds a new layer of complexity to the broader tensions between state and federal policy on trade and innovation.