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California’s Economy Surpasses Japan
California has recently claimed a significant milestone by surpassing Japan to become the fourth largest economy globally, according to new data from the International Monetary Fund (IMF) and the U.S. Bureau of Economic Analysis.
As of 2024, California’s gross domestic product (GDP) has reached an impressive $4.10 trillion (£3.08 trillion), compared to Japan’s GDP of $4.01 trillion. This positions California behind only Germany, China, and the United States as a whole in terms of global economic power.
Governor Gavin Newsom expressed pride in this achievement, stating, “California isn’t just keeping pace with the world – we’re setting the pace.”
This data emerges at a time when Newsom has publicly criticized President Donald Trump’s tariffs and expressed concerns regarding the potential risks these policies pose to California’s economic future. As the state leads the U.S. in both manufacturing and agricultural output, it also stands as a powerhouse in technological innovation, home to Hollywood, and boasts the nation’s two largest seaports.
Newsom, who is seen as a leading Democratic figure and potential presidential candidate for 2028, has taken legal action to contest Trump’s authority to impose tariffs, which have created turbulence in global trade and market dynamics.
In the wake of tariff announcements, President Trump imposed a 10% levy on virtually all U.S. imports, following a brief 90-day pause on increasing tariffs. Additionally, a 25% tariff was introduced for goods from Canada and Mexico. The situation worsened with the imposition of extensive tariffs on Chinese imports, contributing to an ongoing trade conflict with the world’s second-largest economy.
President Trump’s approach has led to import taxes as high as 145% on various Chinese goods, met with retaliatory tariffs of 125% from China on U.S. products. His administration recently reported that the overall tariffs on certain Chinese imports could reach as much as 245% when factoring in both new and existing taxes.
Conveying his concerns regarding the fragility of California’s economy, Newsom stated, “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.”
In contrast, Trump has defended his trade policies by arguing that they are vital for reestablishing a level playing field after years of unfavorable taxation on the United States. His administration has framed these tariffs as a strategy to encourage the return of manufacturing jobs and plants to the U.S., complemented by plans to lower interest rates to help American consumers with borrowing costs.
The new data reflects that California’s GDP lags behind the total U.S. economy, currently at $29.18 trillion, China at $18.74 trillion, and Germany at $4.65 trillion. It further emphasizes California’s status as the fastest-growing economy among the leading global economies.
Japan’s economic struggles are attributed to a declining and aging population, which has led to a shrinking workforce and escalating social care costs. Recently, the IMF downgraded its projections for Japan’s economic growth and suggested that the central bank might raise interest rates at a slower pace due to the adverse effects of updated tariffs.
In their World Economic Outlook report, the IMF pointed out, “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.”
Source
www.bbc.com