California Surpasses Japan to Become the Fourth Largest Economy

California has officially taken the title of the world's fourth largest economy, surpassing Japan, according to the latest data from the International Monetary Fund (IMF) and the US Bureau of Economic Analysis.

California's economy has surged ahead, boasting a gross domestic product (GDP) of $4.10 trillion (£3.08 trillion) for 2024, now surpassing Japan's GDP of $4.01 trillion. Governor Gavin Newsom proudly announced this milestone, emphasizing that California's economy is setting trends rather than just following them. This achievement places California behind only Germany, China, and the total US economic output.

Amidst this significant growth, Newsom has been vocal about his concerns regarding the economic implications of President Donald Trump's tariffs. These levies, which have affected global trade dynamics, have forced Newsom to take action, including filing a lawsuit against Trump's authority to impose such tariffs. California stands as a leader in both manufacturing and agricultural production in the US, making the need to shield its economy even more pressing, according to Newsom's comments during the announcement.

Despite California's achievement, the state's growth may be threatened by Trump's trade policies. The tariffs, introduced as part of Trump's wider economic strategy to bring jobs back to the US, have created uncertainty in markets and have impacted the flow of goods. Trump's administration has implemented tariffs on various countries, leading to disputes particularly with China, which has resulted in significant reciprocal levies.

In contrast, Japan is facing economic challenges, notably due to its ageing and declining population, which has led to workforce shortages. The IMF's revised forecasts reflect Japan's dimming growth prospects, attributing some of these challenges to the impact of US tariffs. This situation creates a juxtaposition between California's rapid ascent and Japan's economic hurdles, highlighting the shifting landscape of global economies.

In summary, California's leap over Japan in terms of economic size underscores its significance on the world stage, while also spotlighting potential vulnerabilities tied to federal trade policies that could threaten its future stability.