How Trump's tariffs could hurt California's economy
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California stands to lose $33 billion — more than any other state except Texas — if President Trump's proposed tariffs on goods from Canada and Mexico take effect, along with those already imposed on China, per a new estimate shared with Axios.
Why it matters: Tariffs may be a political tool for extracting concessions from targeted countries, but they also drive up costs for everyday Americans — especially in California, which already has one of the highest costs of living in the U.S.
Catch up quick: Trump last Saturday imposed tariffs of 25% on Mexican and Canadian goods and 10% on Canadian energy imports. He also issued new 10% tariffs on Chinese imports.
- On Monday, he delayed his planned Mexico and Canada tariffs for 30 days after striking border security deals with both countries.
What they're saying: The looming tariffs would "have a profoundly negative impact on working families" and significantly hurt California's economy, according to Gov. Gavin Newsom.
- "90% of these tariffs will impact the bottom of our economic chain, meaning lower wage workers that pay over half of these taxes. So this is a regressive tax that will have a profound impact on progress and momentum," Newsom said.
Zoom in: California's trade with Mexico is greater than the United States' trade with Argentina, Colombia, Chile, Paraguay and Uruguay combined.
By the numbers: California exported $33.3 billion and imported $61.5 billion in goods with Mexico in 2023 — making the state's southern neighbor its No. 2 trade partner and No. 1 export destination, according to Mexico's Secretaría de Relaciones Exteriores.
- San Diego County, the state's largest border economy, with a regional GDP of $250 billion manufacturing audio and visual equipment, medical devices and semiconductors, could be among the hardest-hit areas.
The big picture: The proposed tariffs would have an estimated $232.7 billion national impact, per research from Trade Partnership Worldwide based on trade from January to November 2024.
- California's burden would trail Texas ($47 billion) and surpass Michigan ($27.8 billion).
How it works: The estimates are based on census data for foreign imports and reflect "the composition of current trade based on existing company-to-company relationships," Trade Partnership Worldwide president Daniel S. Anthony tells Axios.
Caveat: Tariffs may lead to less trade overall — meaning past data isn't necessarily indicative of future tariff effects.
The other side: Trump said tariffs wouldn't increase prices on consumers, though he acknowledged they may cause "temporary short-term disruption."
What we're watching: Trump also said he would "absolutely" impose tariffs on the European Union, though he offered few details.