Sacramento, April 25 : California's economy has overtaken Japan to become the world's fourth-largest economy, behind only the United States, China, and Germany in global economic rankings.

California Governor Gavin Newsom made the announcement, citing the latest data from the International Monetary Fund and the US Bureau of Economic Analysis.

The Golden State's nominal GDP reached $4.1 trillion in 2024, surpassing Japan's $4.02 trillion, said Newsom's office amid tensions between California and federal trade policies.

"California isn't just keeping pace with the world, we're setting the pace. Our economy is thriving because we invest in people, prioritise sustainability and believe in the power of innovation," Newsom said in a statement.

The Golden State's economy has shown remarkable growth in recent years. From 2021 to 2024, California achieved an average nominal GDP growth of 7.5 per cent and the state's growth rate reached 6 per cent in 2024, according to Newsom's office.

California is the top state in the United States for new business starts, access to venture capital funding, and manufacturing, high-tech, and agriculture, the office noted, adding: "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 state contributes significantly to national economic growth, sending over 83 billion dollars more to the federal government than it receives in federal funding, it added.

Despite the achievement, the Governor expressed concern about California's challenges, particularly regarding federal trade policies.

California filed a lawsuit on April 16 against the federal government, challenging its use of emergency powers to impose extensive tariffs. State officials argued these tariffs threaten California's economy and undermine ongoing progress, Xinhua news agency reported.

"The lawsuit seeks to end President (Donald) Trump's tariff chaos, which has wreaked havoc on the economy, destabilised the stock and bond markets, caused hundreds of billions of dollars in losses, and inflicted higher costs for consumers and businesses. These harms will only continue to grow, as President Trump's tariffs are projected to shrink the US economy by $100 billion annually," the office said.

According to a policy analysis by research firm Trade Partnership Worldwide, California could pay over $170 billion in import taxes in 2025 under the new tariff structure.

/IANS