Governor Newsom seeks injunction to immediately stop Trump tariffs

As the largest economy in the nation — and the fourth largest in the world — President Trump’s illegal tariffs are having a profound impact on California’s budget and how the state can meet the needs of its residents.

Economic dominance threatened by recklessness

California is the backbone of the nation’s economy. California’s gross domestic product was $4.1 trillion in 2024. The state drives national economic growth and also sends over $83 billion more to the federal government than it receives in federal funding. California is the leading agricultural producer in the country and is also the center for manufacturing output in the United States, with over 36,000 manufacturing firms employing over 1.1 million Californians. The Golden State’s manufacturing firms have created new industries and supplied the world with manufactured goods spanning aerospace, computers and electronics, and, most recently, zero-emission vehicles.

Impacts on trade and ports 

California companies engaged in nearly $675 billion in two-way trade in 2024, supporting millions of jobs throughout the state. The impacts of the President’s tariff policies are already having an outsized impact on the state’s nation-leading ports, leaving California workers with fewer shifts unloading and transporting the goods. A decline of just 1% in cargo to the Ports of Los Angeles and Long Beach would wipe away 2,769 jobs and endanger as many as 4,000 others, one study found.  

The increased costs associated with these tariffs will also have ripple effects throughout the supply chain, impacting not only longshoremen but also truckers, manufacturers, and retailers throughout the state and nation.

Impacts on the state budget 

California is expected to lose a staggering $7.8 billion in tax revenue from personal income tax, capital gains, and corporate revenue as a result of the tariffs’ impact on California taxpayers. This extraordinary loss of essential revenue is exacerbated by the unpredictable and chaotic approach to imposing tariffs, which has made it extremely difficult for California and its agencies to effectively budget, plan for the future, and properly serve Californians.

The harms from the current tariffs and their uncertain nature are reflected in California’s recently downgraded economic projection for the 2025-2026 Governor’s Budget.  Specifically, this forecast projected increased unemployment and near-term inflation and considerably downgraded projected wage and business income growth, as well as job and personal income growth. These fiscal impacts from tariffs have immediate and devastating effects on California’s budget, which in turn could yield deep cuts to the state’s programs and services.

Impacts on state services 

Additionally, many agencies, including the California Department of Health Care Services and California Department of Public Health, contract with vendors to purchase critical goods which were manufactured outside the United States, including over $8 billion in pharmaceuticals, $300 million in diabetes related supplies, $3 million in pediatric and adult flu vaccines, $700,000 in disease testing kits, among other critical goods.  The President’s tariffs confront California with significantly increased costs to retain access to these essential goods through its contracts. 

In addition to the forthcoming preliminary injunction, California will also be filing an amicus brief as early as today in the Court of International Trade in the case Oregon v. Trump, a case challenging President Trump’s illegal imposition of so called “emergency” tariffs.