California Becomes Fourth-Largest World Economy, Surpassing Japan

2025-04-25 economy

Sacramento, Friday, 25 April 2025.
California’s economic growth has outpaced Japan, becoming the fourth-largest economy globally with a GDP of $4.1 trillion. Governor Newsom warns of risks from President Trump’s tariff policies.

Economic Growth and Milestones

On April 22, 2025, California officially surpassed Japan to become the world’s fourth-largest economy, with a nominal GDP of $4.1 trillion compared to Japan’s $4.5 trillion [1][3][7]. This notable achievement is attributed primarily to the robust growth of California’s technological sector, which has been a significant driver of the state’s economic expansion, outpacing not only Japan but other leading global economies such as the U.S., China, and Germany with a 6% growth rate in 2024 [1][3].

Impact of Tariff Policies

Despite this economic success, Governor Gavin Newsom has expressed concerns regarding the Trump administration’s tariff policies, which could potentially stifle further growth. Newsom has been vocal about the dangers posed by these tariffs, describing them as ‘reckless’ and warning that they could lead to economic chaos by increasing consumer prices and harming businesses [1][5][8]. California, alongside twelve other states, has accordingly filed lawsuits to challenge the administration’s legal authority to impose these tariffs, particularly through the International Emergency Economic Powers Act (IEEPA) [4][5].

Litigation and Trade Partnerships

The state of California, home to significant trade activity, engaged in nearly $675 billion of two-way trade in 2024, with key partners including Mexico, Canada, and China. These nations account for over 40% of California’s $491 billion in total imports [2][5]. The ongoing litigation efforts underscore the urgency of maintaining robust trade links amidst tariff-induced uncertainties. As of April 16, 2025, California’s lawsuit aims to halt the tariffs, citing ‘immediate and irreparable harm’ caused by these national policies [6][8].

Global Context and Economic Forecasts

Globally, economic growth is expected to slow, with the International Monetary Fund forecasting a 2.8% expansion for 2025, a drop from 3.3% in 2024. The U.S. specifically is projected to see only 1.8% growth in the same year, highlighting the broader economic impact of the tariffs [4][8]. As California continues to navigate its new position on the global economic stage, the state remains poised to influence U.S. economic policy through its strategic initiatives and concerted efforts with other states [8].

Sources

California Economy Global Ranking