Newsom aims to develop partnerships amid new tariffs
By Sowjanya Pedada
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4/15/25 (LAPost.com) — Gov. Gavin Newsom has instructed state officials to develop new international trade partnerships and request exemptions for California products from potential retaliatory tariffs as the Trump administration implements its tariff policies.
“California leads the nation as the #1 state for agriculture and manufacturing — and it’s our workers, families, and farmers who stand to lose the most from this Trump tax hike and trade war,” Newsom said. “To our international partners: As the fifth largest economy in the world, the Golden State will remain a steady, reliable partner for generations to come, no matter the turbulence coming out of Washington. California is not Washington, D.C.”
The initiative seeks to protect California’s economy from trade disruptions while maintaining relationships with key trading partners.
Trade with Mexico, Canada, and China represents a significant portion of California’s import market, accounting for approximately 40% of goods entering the state. This is valued at $203 billion of California’s total $491 billion in imports during 2024, according to figures in Newsom’s announcement.
These three nations also serve as California’s primary export destinations, purchasing roughly $67 billion in California products, representing over a third of the state’s $183 billion export total in 2024.
Newsom’s administration referenced research from Yale Budget Lab suggesting the federal tariffs could drive inflation up by approximately 2.3% this year, with food prices potentially rising 2.8% and automotive costs increasing by 8.4%. This could result in additional costs of roughly $3,800 for typical American households.
The plan directs state agencies to identify ways to protect California businesses and workers affected by changing trade conditions, including efforts to maintain employment in trade-dependent industries and ensure access to essential materials.
State officials expressed specific concerns about obtaining construction supplies needed for rebuilding after wildfires in the Los Angeles area – particularly items like lumber, metal products and drywall materials that might face higher costs due to tariffs.
California remains the fifth-largest global economy, with a gross domestic product worth $3.9 trillion. The state facilitates more than $675 billion in two-way trade annually, supporting employment for millions of residents.
California’s manufacturing industry, which has led the nation since the mid-1960s, encompasses more than 36,000 businesses and employs approximately 1.1 million workers across various sectors.
Newsom’s announcement highlighted concerns that tariff retaliation could particularly harm the state’s estimated 60,000 small businesses engaged in exports. Officials also warned about potential complications for manufacturing operations that span the California-Mexico border region.
Products crossing international boundaries multiple times during production could face compounded tax effects, resulting in higher consumer prices, particularly in the technology, aerospace, and automobile industries.
The trade initiative follows California’s broader international engagement strategy. Under Newsom’s leadership, the state has established 38 agreements with 28 global partners focusing on economic and environmental cooperation.
California maintains leading positions in several economic categories nationally, including business formation, venture capital investment, manufacturing output, technology development and agricultural production. The state houses more Fortune 500 companies than any other and is home to nearly two-thirds of the world’s top 50 artificial intelligence firms.
According to Newsom’s announcement, California annually contributes over $83 billion to the federal government.
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