In a landmark economic achievement, California has surpassed Japan to become the world’s fourth-largest economy, a milestone that highlights the state’s growing economic strength and influence on the global stage. According to preliminary data from the U.S. Bureau of Economic Analysis, California’s nominal Gross Domestic Product (GDP) reached $4.1 trillion in 2024, edging past Japan’s $4.02 trillion. This marks a significant shift, positioning California just behind the United States, China, and Germany in terms of economic size.
Governor Gavin Newsom celebrated the achievement, attributing the state’s impressive growth to its focus on innovation, sustainability, and investment in its people. “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 this economic triumph, Newsom also expressed concern about the potential risks posed by federal policies, particularly President Donald Trump’s tariffs. The governor warned that the state’s economic progress could be jeopardized by these trade restrictions, which have already disrupted supply chains and inflated costs for businesses and consumers alike. Newsom has been a vocal critic of Trump’s trade policies and recently filed a lawsuit against the administration, arguing that the tariffs, enacted under the International Economic Emergency Powers Act, are unlawful and harmful to California’s economy.
In 2024, California accounted for approximately 14% of the nation’s GDP, driven largely by its dominant tech industry in Silicon Valley, along with its real estate and finance sectors. The state’s economic growth of 6% last year outpaced many other countries, solidifying its position as a global economic powerhouse. However, California’s success has been closely tied to its trade relationships with countries like China, Mexico, and Canada, with these nations making up the bulk of the state’s imports and exports.
California’s economy is a critical driver of the U.S. economy, with nearly $675 billion in two-way trade in 2024. Over 40% of the state’s imports came from its top three trade partners, contributing to a robust, interconnected economy that relies heavily on international markets.
Newsom’s lawsuit, filed in federal court on April 16, claims that Trump’s tariffs have inflicted “billions in damages” on the state, particularly affecting its manufacturing, agriculture, and tech sectors. The governor argues that these tariff policies have led to inflated costs and disrupted business operations, further stressing the importance of protecting California’s economic interests.
As the lawsuit moves forward, the broader implications of California’s economic rise and the federal government’s trade policies remain a key issue in shaping the future of both state and national economies. As California continues to thrive as a global economic leader, its ability to navigate challenges and sustain growth will be critical in maintaining its newfound position as the world’s fourth-largest economy.
California’s ascent to this position underscores its vital role in shaping global trade, innovation, and economic policy, and serves as a powerful reminder of the state’s resilience and ability to drive change on the international stage.