California Surpasses Japan to Become World’s Fourth-Largest Economy

California has officially overtaken Japan to become the fourth-largest economy in the world, according to new data from the International Monetary Fund (IMF) and the U.S. Bureau of Economic Analysis.

The data shows California's gross domestic product (GDP) reached $4.10 trillion in 2024, edging past Japan’s $4.01 trillion. The state now ranks behind only the United States as a whole ($29.18 trillion), China ($18.74 trillion), and Germany ($4.65 trillion).

"California isn't just keeping pace with the world — we're setting the pace," said Governor Gavin Newsom, who welcomed the economic milestone.

The Golden State leads the nation in manufacturing and agriculture and serves as a global hub for technology, entertainment, and international trade. Its economy also benefits from the presence of the country’s two busiest seaports.

Despite the achievement, Newsom warned that federal trade policies under President Donald Trump pose a risk to the state's economic future. He has been vocal in his opposition to Trump’s tariff strategies and has filed a legal challenge against the president’s authority to impose sweeping levies.

Trump has implemented 10% tariffs on most imports into the U.S., with additional 25% duties targeting goods from Mexico and Canada. The most aggressive actions, however, have been aimed at China, with tariffs reaching as high as 145% — and potentially up to 245% when combined with previous measures. China has retaliated with up to 125% tariffs on U.S. products, escalating tensions into a full-blown trade war.

"While we celebrate this success, we recognize that our progress is threatened by the reckless tariff policies of the current federal administration," Newsom said. "California's economy powers the nation, and it must be protected."

Trump maintains that the tariffs are necessary to correct what he describes as unfair trade practices and to encourage the return of manufacturing jobs to the U.S. His broader economic plan also includes interest rate cuts aimed at reducing borrowing costs.

Japan, once the world’s second-largest economy, has seen growth stagnate due to a shrinking workforce and rising social welfare costs driven by an ageing population. This week, the IMF downgraded Japan's growth outlook, citing concerns over the economic impact of global tariffs and slower-than-expected interest rate adjustments by the country’s central bank.

California’s rise comes not only from sheer output but also from being the fastest-growing economy among the top five — a point of pride for the state as it navigates both global economic shifts and domestic political headwinds.