California has officially surpassed Japan in terms of economic size, solidifying its position as the world’s fourth-largest economy. According to recent data released by the International Monetary Fund (IMF) and the U.S. Bureau of Economic Analysis, California’s Gross Domestic Product (GDP) reached an impressive $4.10 trillion in 2024. In comparison, Japan's GDP was recorded at $4.01 trillion, highlighting a significant economic shift on the global stage.

This milestone positions the Golden State behind only three economic giants: the United States as a whole ($29.18 trillion), China ($18.74 trillion), and Germany ($4.65 trillion). California's strong economic performance has drawn praise and national attention, with Governor Gavin Newsom emphasizing the state’s dynamic growth and diverse economic base.

A Powerhouse of Innovation, Industry, and Trade

California's economy thrives on a combination of innovation, technology, agriculture, and manufacturing. It boasts the largest share of agricultural and manufacturing output in the United States and is home to some of the world's most influential tech companies. The state also hosts Hollywood, the epicenter of global entertainment, and operates the two largest seaports in the country, which are crucial to international trade.

From Silicon Valley's cutting-edge technology to the Central Valley’s agricultural productivity, California continues to play a pivotal role in powering the U.S. economy. The state’s economic structure is not only robust but also highly diversified, allowing it to outperform many national economies, including that of Japan, whose economic growth has slowed due to demographic challenges.

Newsom Criticizes Trump’s Tariff Strategy Amid Global Trade Tensions

Governor Gavin Newsom, a prominent Democrat and potential contender for the 2028 presidential race, has expressed concern about the future of California's economic trajectory. Despite the state's recent success, Newsom criticized former President Donald Trump’s aggressive tariff policies, warning that such strategies could endanger future growth.

Trump’s administration imposed sweeping tariffs, including a 10% levy on nearly all imports and a separate 25% tariff targeting goods from Mexico and Canada. China, the main focus of the trade war, faced even more substantial duties, with some goods being taxed at rates as high as 145%. When combined with preexisting levies, some Chinese imports now carry a total tariff burden of up to 245%. China retaliated with its own set of tariffs, including a 125% tax on American exports, exacerbating tensions between the two largest economies in the world.

Newsom responded to these developments by filing a lawsuit challenging the federal government's authority to impose such tariffs, citing the harm caused to California’s trade-dependent sectors. “While we celebrate this success,” he said, “we recognize that our progress is threatened by the reckless tariff policies of the current federal administration.”

Japan's Economic Struggles Contrast with California’s Growth

While California surges ahead, Japan faces increasing economic strain. One of the main contributors to Japan’s slowdown is its ageing and shrinking population, which has led to a dwindling workforce and escalating healthcare costs. The IMF recently revised its growth forecast for Japan downward, citing the adverse effects of rising tariffs and overall economic uncertainty.

The IMF’s World Economic Outlook also noted that Japan’s central bank is likely to slow its interest rate hikes due to these challenges. Although Japanese households are expected to benefit from wage increases that exceed inflation, helping to boost disposable income, the negative impact of global trade disputes is undermining potential economic recovery.

Setting the Global Pace

Governor Newsom concluded his remarks on a confident note, stating, “California isn't just keeping pace with the world – we're setting the pace.” This statement reflects the broader reality that California’s economy has not only weathered global challenges but thrived in the face of them.

As global economic dynamics continue to shift, California’s resilience and innovation place it at the forefront of growth and influence. However, Newsom warns that this momentum must be protected against destabilizing policies, particularly those affecting trade, to maintain its status as a global economic leader.