California has officially become the world’s fourth-largest economy, overtaking Japan, Governor Gavin Newsom announced. The state’s nominal GDP climbed to $4.1 trillion in 2024, edging past Japan’s $4.02 trillion, based on preliminary figures from the U.S. Bureau of Economic Analysis and the International Monetary Fund.
This places California behind only the United States, China, and Germany in terms of economic size. Remarkably, California also outpaced all three with an impressive 6% growth rate last year.
“California isn’t just keeping pace with the world — we’re setting the pace,” said Newsom in a statement. He credited the state’s success to investments in people, sustainability, and innovation.
However, Newsom expressed concern about the economic risk posed by President Donald Trump’s new tariffs. He criticized the former president’s use of emergency powers to enforce wide-reaching trade measures, warning they threaten California’s booming tech sector and broader economy.
As the most populous U.S. state, with around 40 million residents, California made up roughly 14% of the national GDP in 2024. Key drivers of its economy include Silicon Valley, as well as strong real estate and finance sectors.
On April 16, Newsom filed a federal lawsuit challenging Trump’s use of emergency powers to impose tariffs on countries like Mexico, China, and Canada — as well as a 10% blanket tariff on goods from the rest of the world. The lawsuit claims Trump’s actions are unlawful, arguing that the International Emergency Economic Powers Act (IEEPA) doesn’t grant the president such sweeping authority without Congressional involvement.
Newsom said the tariffs have disrupted supply chains, raised consumer costs, and caused billions of dollars in damage to California’s economy — particularly in manufacturing and agriculture.
Under IEEPA, passed in 1977, the president does have broad power during national emergencies to regulate trade and financial activity. However, the law requires consultation and reporting to Congress when exercised.
California’s economy is deeply tied to global trade, with around $675 billion in two-way trade in 2024. Mexico, Canada, and China remain its top three trading partners, contributing more than $200 billion of the state’s $491 billion in total imports.
Twelve other states have also joined the legal challenge against the tariffs, claiming the measures amount to illegal tax increases on Americans. The White House has dismissed the lawsuits as politically motivated.