California has overtaken Japan to become the world’s fourth-largest economy, Gov. Gavin Newsom announced, after its nominal gross domestic product (GDP) reached $4.1 trillion in 2024. The milestone places the Golden State behind only the United States, China, and Germany, and reflects a 6 per centt growthrate last year, outpacing all three larger economies.
According to preliminary data from the US Bureau of Economic Analysis, California’s GDP rose from $3.9 trillion in 2023 to $4.1 trillion in 2024. That edged past Japan’s $4.02 trillion nominal GDP over the same period, as reported by the International Monetary Fund.
As the nation’s most populous state home to roughly 40 million residents California accounted for 14 percent of US economic output in 2024. Its growth was driven by strength in the technology, real estate, and finance sectors, which are clustered in Silicon Valley and Greater Los Angeles.
Impact of Federal Tariffs
Newsom used the announcement to renew his warning that President Donald Trump’s emergency-tariff policies threaten California’s economic momentum. “California isn’t just keeping pace with the world—we’re setting the pace,” he said, adding that “reckless tariff policies” risk disrupting supply chains and inflating costs for families and businesses.
Last week, California filed suit in federal court challenging Trump’s authority under the International Economic Emergency Powers Act to impose global tariffs without congressional approval. The lawsuit contends that the tariffs on imports from Mexico, China, Canada, and other nations inflict “immediate and irreparable harm” on the state’s manufacturing and agriculture industries.
California Fourth-largest Economy
California’s economic leap highlights both the promise and fragility of relying on volatile global trade policies. While the state outperformed the US (5.3 percent), China (2.6 percent) and Germany (2.9 percent) in GDP growth, its export-dependent industries remain sensitive to tariff fluctuations. In 2024, California engaged in $675 billion of two-way trade, with over 40 percent of imports coming from its top three partners: Mexico, Canada, and China.
Twelve other states joined California’s lawsuit this week, accusing the administration of “illegally imposing” tax increases on Americans through tariffs—a move the White House has derided as a “witch hunt.”
What’s Next
In the short term, California officials will closely monitor legal proceedings and work to mitigate the impacts of tariffs on key sectors. The state plans targeted support for manufacturers and farmers affected by higher import costs. Over the long term, policymakers say they will continue to invest in innovation, sustainability, and workforce development to maintain California’s competitive edge.
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