Governor Newsom directs state to pursue strategic relationships with worldwide buying and selling companions; urges exemptions of California-made merchandise from tariffs

Defending California’s financial dominance 

California is the fifth-largest financial system on the earth, the strongest financial system within the nation, and the most important importer amongst all U.S. states, with greater than $675 billion in two-way commerce supporting hundreds of thousands of jobs all through the state. California’s gross home product of $3.9 trillion is 50% larger than the GDP of the nation’s subsequent largest state, Texas, and is the important thing to the USA’ financial progress. California sends greater than $83 billion to the federal authorities yearly.

California is dwelling to essentially the most Fortune 500 firms, beating out Texas, Florida, and all different states. California stays #1 within the nation for brand new enterprise begins, #1 for entry to enterprise capital funding, #1 for manufacturing, #1 for high-tech, and #1 for agriculture.

California stands as the middle for manufacturing output in the USA with over 36,000 manufacturing corporations and using over 1.1 million Californians. Since California supplanted New York in 1965, our manufacturing corporations have created new industries and provided the world with manufactured items spanning aerospace, computer systems and electronics, and, most just lately, zero-emission automobiles.

California is dwelling to 32 of the world’s 50 main AI firms, high-impact analysis and training establishments, and 1 / 4 of the expertise’s patents and convention papers. California’s inhabitants has elevated a number of years in a row and has some of the equitable tax methods in the whole nation. Journey spending reached an all-time excessive of $150.4 billion.

California’s long-standing dedication to international cooperation, innovation, and openness has helped energy its rise to the world’s fifth-largest financial system — main in good-paying jobs to help California’s working households. With the Governor’s announcement as we speak, the state will lengthen that management via strategic, mutually helpful partnerships rooted in respect, belief, and shared progress.

Figuring out partnerships 

With this announcement, Governor Newsom is directing his Administration to establish collaborative alternatives with buying and selling companions that defend California’s financial pursuits — staff, producers, and companies — and the broader provide chains linked to the state’s financial system. The administration will discover methods to:

• Assist job creation and innovation in industries reliant on cross-border commerce.
• Promote financial stability for companies and staff impacted by federal commerce disruptions.
• Safeguard entry to essential provides, corresponding to building supplies wanted for restoration efforts following the devastating Los Angeles firestorms.

Impression of tariffs on state commerce

California’s financial system and staff rely closely on commerce with Mexico, Canada, and China. Over 40% of California imports come from these international locations, totaling $203 billion of the greater than $491 billion in items imported by California in 2024. The tariffs may also have an effect on entry to essential building supplies essential to rebuilding after the Los Angeles fires, together with timber and wooden, metal and aluminum, and a very powerful parts of drywall.

Retaliatory tariffs may also have an outsized affect on California companies, notably its greater than 60,000 small enterprise exporters. Mexico, Canada, and China are California’s high three export locations, shopping for almost $67 billion in California exports, which was over one-third of the state’s $183 billion in exported items in 2024. Retaliatory tariffs additionally affect farmers and ranchers throughout a troublesome time within the U.S. farm financial system – fostering a better want for mitigation and increasing international market share.

The magnitude of those tariffs on our North American allies, and the retaliation, may also end in main disruptions to cross-border provide chains, together with the mutually helpful co-production that takes place within the California-Baja mega-region. If these items are taxed every time they cross the border, the value of the ultimate product will rise and finally be handed on to California shoppers. This can have far-reaching impacts, affecting every little thing from semiconductors to aerospace and automotive merchandise.

Evaluation by the Yale Funds Lab discovered that the tariffs introduced by the Trump Administration to this point will possible end in a 2.3% enhance in total inflation this yr alone — together with a 2.8% enhance in meals costs and an 8.4% enhance in automotive costs — translating to an affect of $3,800 on the common American family.

Lengthy-standing worldwide relationships

California has lengthy been a key participant on the worldwide stage — from taking joint motion on local weather change to figuring out new pathways and partnerships for sustained financial progress. Through the Newsom Administration alone, California has signed 38 worldwide agreements with 28 completely different international companions that lay essential groundwork for extended financial success in addition to prioritizing staff and companies that profit from these new alternatives.