California overtakes Japan to become the world's fourth-largest economy

A single US state has overtaken Japan to become the world's fourth largest economy. California made a staggering $4.1 trillion in GDP last year, according to data from the US Bureau of Economic Analysis. The figure pushed it past Japan's $4.02 trillion in the same period, the International Monetary Fund reported.

California's GDP growth also outpaced the three largest economies — the US, China and Germany — with an increase of six percent in 2024. 'California isn't just keeping pace with the world — we're setting the pace,' Governor Gavin Newsom said on Wednesday.

'Our economy is thriving because we invest in people, prioritize sustainability and believe in the power of innovation.' However, Newsom warned that the Golden State's prosperity is being put at risk by 'the reckless tariff policies of the current federal administration.'

'California's economy powers the nation, and it must be protected,' he added. The state, which is home to 40 million people, contributed 14 percent of the entire country's GDP last year, according to government data.

Its economy is driven by Silicon Valley tech companies such as Google as well as its real estate and finance sectors. It comes after Newsom filed a lawsuit against President Donald Trump for his use of emergency powers to impose sweeping tariffs on dozens of countries.

The lawsuit alleges that the president lacks the authority to impose the tariffs, which now include 145 percent duty on Chinese goods, and 10 percent on most of the rest of the world. The duties are creating 'immediate and irreparable harm to California, the largest economy, manufacturing, and agriculture state in the nation,' Newsom said when announcing the lawsuit.

He added that the tariffs are harming Californian families by driving up costs of everyday items and inflicting 'billions in damage' on the state's economy. The lawsuit argues that Trump's invocation of the International Economic Emergency Powers Act to bring in tariffs was 'unlawful and unprecedented,' and that the action requires approval from Congress, CNN reported.

California engaged in nearly $675 billion of two-way trade last year, and counts Canada, China and Mexico as its top three trade partners. According to the state, over 40 percent of its imports came from these countries, accounting for $203 billion of its more than $491 billion in total imports in 2024. A dozen states also sued the Trump administration in the U.S. Court of International Trade on Wednesday over its tariff policy, which they say 'brought chaos to the American economy.'

The White House retaliated, calling the lawsuit a 'witch hunt.' Walmart and Target bosses have also made private warnings to the White House that tariffs could cause major disruption for everyday items within weeks. The CEOs of the major stores warned Trump that his aggressive trade policy could disrupt supply chains and lead to empty grocery store shelves in the coming weeks, CBS News reported. Walmart sources 60 percent of its goods from China, while Target sources 50 percent, according to Reuters research.

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