California's economy has officially surpassed Japan's, making the Golden State the fourth largest economy in the world, as announced by Governor Gavin Newsom on April 24, 2025. This significant milestone indicates a gross domestic product (GDP) of $4.1 trillion, edging out Japan's $4.02 trillion, according to data from the International Monetary Fund (IMF) and the U.S. Bureau of Economic Analysis.
In his statement on social media platform X, Newsom declared, "CA just became the 4th largest economy in the WORLD." This achievement places California behind only the United States, China, and Germany in global economic rankings. Notably, the state's GDP growth rate in 2024 was an impressive 6%, outpacing the U.S. growth rate of 5.3%, China's 2.6%, and Germany's 2.9%.
"California isn't just keeping pace with the world—we're setting the pace," Newsom emphasized, highlighting the state's focus on investing in its people, prioritizing sustainability, and harnessing the power of innovation. However, he also expressed concern about the potential threats to this progress posed by the current federal administration's tariff policies.
In recent weeks, California's attorney general filed a lawsuit against the Trump administration, challenging the legality of the tariffs imposed on imports. Newsom stated, "No state is poised to lose more than the state of California," during a press conference where he announced the lawsuit. He warned that the reckless tariff policies could jeopardize California's economic interests, which play a crucial role in powering the national economy.
The tariffs, which include a 10% levy on nearly all countries importing to the U.S., have raised concerns about their impact on global markets and trade. President Trump has also imposed a 25% tariff on imports from Mexico and Canada and has engaged in a trade war with China, imposing import taxes of up to 145% on Chinese goods. In retaliation, China has enacted a 125% tax on American products, leading to escalating tensions and uncertainty in international trade.
Despite these challenges, California remains a powerhouse of economic activity. It boasts the largest share of manufacturing and agricultural production in the U.S., along with being the epicenter of technological innovation and the entertainment industry. The state's population of nearly 40 million contributes significantly to its economic growth, with California sending $83 billion more to the federal government than it receives in federal funding.
While the economy thrives, California faces pressing issues, including a severe shortage of affordable housing, which has exacerbated the homelessness crisis in the state. Nevertheless, tourism spending reached an all-time high last year, although some areas have seen declines, particularly in Canadian tourism, which dropped by 12% in February 2025 compared to the previous year due to the ongoing tariff war.
In response to the decline in Canadian visitors, California has initiated a campaign to attract tourists back, with some cities even putting up pro-Canada signs to welcome them. This proactive approach reflects the state's commitment to maintaining its status as a leading destination for tourists and a robust economic force.
As California celebrates its new position as the fourth-largest economy, the governor's administration is acutely aware of the challenges that lie ahead. The IMF has recently cut its economic growth forecast for Japan, attributing the slowdown to its aging population and increasing social care costs. This shift in Japan's economic landscape further underscores California's rising prominence on the world stage.
In light of these developments, Newsom's administration is determined to protect California's economic interests. "While we celebrate this success, we recognize that our progress is threatened by the reckless tariff policies of the current federal administration. California's economy powers the nation, and it must be protected," he reiterated.
This announcement marks a pivotal moment for California, as it not only highlights the state's economic achievements but also brings to the forefront the ongoing challenges posed by federal policies. As the world watches, California's resilience and adaptability will be put to the test in the coming months.
