SACRAMENTO — Gov. Gavin Newsom announced Friday that California will look for ways to expand trade and persuade international partners to exempt the state from global payback as President Trump’s sweeping round of tariffs sent U.S. and global financial markets tumbling.
“We’re not scared to use our market power to fight back against the largest tax hike of our lifetime,” Newsom posted Friday on the social media platform X. In a video, he noted that the 40 million residents of California live in “the tent pole of the U.S. economy” that represents 14% of the nation’s GDP.
Newsom, a Democrat who has frequently sparred with Trump, said he had directed his administration to “look at new opportunities to expand trade and to remind our trading partners around the globe that California remains a stable partner.”
“California is not Washington, D.C.,” Newsom told California’s international partners in a news release. “The Golden State will remain a steady, reliable partner for generations to come, no matter the turbulence coming out of Washington.”
California leads the nation in manufacturing and agriculture, and tariffs could adversely affect many sectors of the state’s economy, from the tech industry to the ports. But it’s unclear exactly how Newsom’s efforts to carve out exemptions would work, the degree to which a state can forge such exceptions or what resources Newsom would invest in prioritizing new trade agreements.
A Newsom administration official, who requested anonymity because they were not authorized to talk publicly about the announcement, said nations have wide latitude to shape and target retaliatory tariffs. In a news release, the governor’s office said it would work to pursue “collaborative opportunities with trading partners” that protect California’s economic interests and the broader supply chains linked to the state’s economy.
The administration, it said, will explore ways to “support job creation and innovation in industries reliant on cross-border trade, promote economic stability for businesses and workers impacted by federal trade disruptions [and] safeguard access to critical supplies, such as construction materials needed for recovery efforts following the devastating Los Angeles firestorms.”
Kush Desai, a White House spokesman, suggested Newsom had the wrong priorities.
“Gavin Newsom should focus on out-of-control homelessness, crime, regulations, and unaffordability in California,” he said, “instead of trying his hand at international dealmaking.”
Newsom can’t dissuade Trump from his tariffs, which would likely mean fewer imports and higher prices for California, said Jonathan D. Aronson, a professor at USC Annenberg who specializes in international trade and communications. But he might be able to persuade some nations not to retaliate against the state’s industries.
“California exports a lot of almonds and avocados, a lot of tech and electronics,” Aronson said. “It might well be something that says, ’Hey, can you not target almonds? Can you not target big tech? Can you not target these things that we specialize in?’”
Newsom is not the only governor of a Democratic state seeking to bolster global trading relationships with foreign regions as Trump imposes tariffs. Earlier this week, Illinois Gov. JB Pritzker traveled to Mexico City to sign an agreement with Mexico’s most populous state, emphasizing the value of bilateral trade and investment, manufacturing and agriculture, supply chains and investments in e-mobility and agriculture tech.
“More than ever before, we must reassure our neighbors in Mexico that Illinois will remain a beacon of economic and cultural cooperation and opportunity for our people,” Pritzker said in a statement.
Newsom’s initiative is broader and potentially more ambitious. But Aronson noted that it would be a tough message to pitch to a nation such as China, which provides almost 30% of California’s total imports.
“China cares about only one country, which is China,” he said. “How much attention would the Chinese pay to this? Who knows?”
Still, Aronson said, even if Newsom’s pitch is unlikely to move some global players, it might help if California can persuade some nations that are retaliating to be more targeted.
“Everybody else is not targeting California: They’re targeting the United States, and California is getting caught in the wash,” Aronson said. “So, to the extent you can persuade others that we’re still a good place to deal with and wouldn’t you like to come here — you’ve still going to do business with the United States, because we’re so big — if you’re going to deal with that, we’re a reliably sane state.”
Stock markets worldwide plummeted Friday after China matched Trump’s significant raise in tariffs in an escalating trade war. On Thursday, the S&P 500, the Dow Jones industrial average and Nasdaq composite all reached their lowest one-day drops since the economy tanked at the outset of the COVID-19 pandemic in 2020.
The tariffs hit some of California’s top trading partners. Trump imposed additional duties of 24% on Japan, 25% on South Korea and 34% on China, on top of a 20% tariff applied to that nation over illegal imports of the deadly drug fentanyl.
Canada and Mexico were excluded from both the baseline and what Trump calls ‘reciprocal’ tariffs. The term is generally understood to mean charging an equal rate on imports as the other nation charges on exports. But Trump is imposing higher rates.
Most U.S. produce imports, such as avocados, cucumbers and mushrooms, come from Mexico and Canada, so the carving out could ease the effect at the nation’s grocery stores. But the countries still face 25% levies on certain goods and 25% tariffs on imported cars and light trucks. Car buyers across Southern California scrambled this week to make purchases ahead of the tariffs.
“It’s going to have a huge, huge impact on manufacturing and supply chains throughout California,” economist Kevin Klowden of the Milken Institute in Santa Monica told The Times on Thursday. “We don’t have the specialized manufacturing for all of these supply chains, and certainly not at cost in the U.S.”
Rick Kushman, a spokesperson for the Almond Board of California, said the organization was closely monitoring Trump‘s and Newsom’s announcements.
“Maintaining a diverse export program is essential,” Kushman said, noting that California almonds are shipped to more than 100 destinations. “We will continue to work with our trade partners around the globe to determine what actions may be taken in our export markets.”
Earlier this year, Newsom’s financial advisors warned that tariffs imposed by the Trump administration could have a devastating effect on California’s economic and revenue outlook.
California would be especially vulnerable to tariffs because the ports of Los Angeles, Long Beach and Oakland — as well as the massive logistics industry in the Inland Empire — depend heavily on foreign trade.
With the stock market plummeting because of fears of a global trade war, California’s state budget may also take a major hit. The budget is largely dependent on income taxes paid by its highest earners. Revenues are prone to volatility, hinging on capital gains from investments, bonuses to executives and windfalls from new stock offerings. When the stock market crashes, so does state tax revenue.
Trump said the new tariffs represent a turning point globally and for the United States. He dubbed Wednesday “Liberation Day.”
“Our country and its taxpayers have been ripped off for more than 50 years, but it is not going to happen anymore. It’s not gonna happen,” Trump said. “This is one of the most important days, in my opinion, in American history. It’s our declaration of economic independence.”
Over the last decade, California has made concentrated efforts to establish itself nationally and internationally as a beacon of liberal resistance to the administration. During Trump’s first term, California sued his administration about 120 times over four years, often with success.
In Trump’s current term, California Atty. Gen. Rob Bonta’s office has joined other states in rekindling that legal fight, challenging the administration on presidential actions on the environment, immigration, voting rights, education policy, dismantling federal agencies and programs and other issues.
For years, California leaders have also worked to establish relationships with foreign leaders and local government officials in other nations, separate from whatever administration occupies the White House. Both Newsom and former Gov. Jerry Brown entered into agreements with other countries on climate policies, efforts accelerated because of Trump’s hostility to international environmental cooperation during his first term.
California’s recent efforts at international trade agreements have been modest gestures. Since 2019, the state has entered into a series of general business and trade deals with Japan, Australia, Norway, Armenia and Gyeonggi-do province in South Korea, according to the Governor’s office. The agreements were meant to foster cooperation and collaboration among business sectors and government officials and programs, but do not touch on the issue of tariffs.
Times staff writers Michael Wilner, Laurence Darmiento, Connor Sheets and the Associated Press contributed to this report.