California has Overtaken Japan to Become the World’s Fourth-Largest Economy.

California’s economy has now surpassed Japan, making the US state the fourth-largest economy globally.

Governor Gavin Newsom highlighted new data from the International Monetary Fund (IMF) and the US Bureau of Economic Analysis, showing California’s impressive economic growth.

The data reveals California’s gross domestic product (GDP) reached $4.10 trillion (£3.08 trillion) in 2024, surpassing Japan’s $4.01 trillion. The state now ranks just behind Germany, China, and the United States.

“California isn’t just keeping pace with the world – we’re setting the pace,” Newsom stated. This comes as Newsom has voiced concerns about President Donald Trump’s tariffs and their potential impact on California’s economy.

California leads the US in manufacturing and agricultural production, houses major technological innovations, and is the global entertainment hub with the nation’s two largest seaports.

Newsom, a prominent Democrat and potential 2028 presidential candidate, filed a lawsuit challenging Trump’s authority to impose tariffs, which have disrupted global markets and trade.

Trump imposed a 10% tariff on nearly all imports to the US, with a 90-day pause on higher rates. Additional 25% tariffs were placed on Mexico and Canada, while trade tensions with China escalated, leading to a full-blown trade war. Trump’s tariffs on Chinese goods could reach up to 245% when combined with existing levies.

Newsom expressed concerns over the future of California’s economy, stating, “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.”

Trump, however, maintains that his trade policies aim to level the playing field after years of US taxation and are a key element of his economic strategy, alongside interest rate cuts to reduce borrowing costs.

The new figures show California’s GDP ranks behind the US at $29.18 trillion, China at $18.74 trillion, and Germany at $4.65 trillion. Notably, California had the fastest growth among these economies.

Japan’s economy is under strain due to its shrinking and aging population, which is reducing its workforce and inflating social care costs. This week, the IMF downgraded Japan’s growth forecast and projected slower interest rate increases due to the effect of higher tariffs.

The IMF’s World Economic Outlook report noted, “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.”