California’s economy has overtaken that of the country of Japan, making the US state the fourth largest global economic force.
Governor Gavin Newsom touted new data from the International Monetary Fund (IMF) and the US Bureau of Economic Analysis showing California’s growth.
The data shows California’s gross domestic product (GDP) hit $4.10 trillion (£3.08 trillion) in 2024, surpassing Japan, which was marked at $4.01 trillion. The state now only trails Germany, China and the US as a whole.
“California isn’t just keeping pace with the world – we’re setting the pace,” Newsom said.
The new figures come as Newsom has spoken out against President Donald Trump’s tariffs and voiced concern about the future of the state’s economy.
California has the largest share of manufacturing and agricultural production in the US. It is also home to leading technological innovation, the centre of the world’s entertainment industry and the country’s two largest seaports.
Newsom, a prominent Democrat and possible presidential candidate in 2028, filed a lawsuit challenging Trump’s authority to impose the levies, which have caused disruption to global markets and trade.
Trump has enacted 10% levies on almost all countries importing to the US, after announcing a 90-day pause on higher tariffs.
Another 25% tariff was imposed on Mexico and Canada. The levies on China, however, have led to an all-out trade war with the world’s second largest economy.
Trump imposed import taxes of up to 145% on Chinese goods coming into the US and China hit back with a 125% tax on American products.
His administration said last week that when the new tariffs were added on to existing ones, the levies on some Chinese goods could reach 245%.
Newsom noted his worries about the future of the state’s economy.
“While we celebrate this success, we recognise that our progress is threatened by the reckless tariff policies of the current federal administration,” he said. “California’s economy powers the nation, and it must be protected.”
Trump has argued his trade war is only levelling the playing field after years of the US being taken advantage of.
The tariffs are an effort to encourage factories and jobs to return to the US. It is one major pillar of his economic agenda, as is a cut in interest rates, aimed at reducing the cost of borrowing for Americans.
The new data shows California’s GDP behind the US at $29.18 trillion, China at $18.74 trillion and Germany at $4.65 trillion. It also shows California was the fastest growing among those countries.
Japan’s economy is under pressure because of its decreasing and ageing population, which means its workforce is shrinking and social care costs are ballooning.
This week, the IMF cut its economic growth forecast for Japan and projected that the central bank would raise interest rates more slowly than previously expected because of the impact of higher tariffs.
“The effect of tariffs announced on April 2 and associated uncertainty offset the expected strengthening of private consumption with above-inflation wage growth boosting household disposable income,” its World Economic Outlook report said.
