Governor Newsom sues over new China tariffs as small businesses scramble to find new suppliers and stay afloat.
As tariffs on Chinese imports surge to historic levels—ranging from 145% to 245%—California’s economy finds itself at the center of the storm. The Golden State’s industries, supply chains, and millions of jobs tied to international trade face unprecedented pressure. At the same time, Governor Gavin Newsom is taking a high-profile stand against these tariffs, filing a federal lawsuit challenging President Trump’s authority to impose them unilaterally.
California is the largest state economy in the U.S. and a critical player in global trade. It processed nearly $675 billion in two-way trade in 2024, much of it with China, Mexico, and Canada. More than 40% of California’s imports—valued at $203 billion—come from these three countries. Chinese goods make up a significant portion of this, especially in key sectors:
- Electronics and tech equipment – From smartphones to data processors and electric batteries, California’s Silicon Valley companies depend heavily on Chinese manufacturing.
- Furniture and apparel – Retailers, from big box chains to small fashion startups, rely on Chinese imports to keep prices competitive.
- Agriculture and manufacturing – California leads the U.S. in agricultural output and has over 36,000 manufacturing firms. Both sectors are feeling the sting from disrupted supply chains and soaring input costs.
The ripple effect from these tariffs impacts consumers, workers, and local economies alike. “These tariffs are wreaking chaos on California families, businesses, and our economy—driving up prices and threatening jobs,” said Governor Newsom.
To combat the economic damage, Newsom, along with California Attorney General Rob Bonta, has filed a lawsuit arguing that President Trump overstepped his authority by invoking the International Economic Emergency Powers Act (IEEPA)—a statute that doesn’t explicitly grant the power to impose tariffs.
This legal challenge is more than a symbolic gesture. It aims to void the tariffs and block future unilateral actions that could destabilize the national—and especially Californian—economy. The lawsuit invokes the U.S. Supreme Court’s major questions doctrine, which requires explicit Congressional authorization for executive actions with vast economic consequences.
As the fifth-largest economy in the world, California sends $83 billion more to the federal government than it receives. In Newsom’s view, policies that threaten this economic engine should not be made by presidential decree.
While the lawsuit plays out, the reality on the ground is already affecting procurement, pricing, and planning. California businesses must take proactive steps to mitigate disruption:
- Diversify Your Supply Chain: Relying solely on China is no longer a safe strategy. Alternatives like Vietnam, India, and Mexico are increasingly viable—but face their own tariff risks.
- Use Tools Like Altana’s Supply Chain Mapping: Altana provides AI-driven analytics to trace product origins, evaluate exposure to tariffs, and identify alternate sourcing strategies. While California-specific data isn’t yet public, companies can use Altana’s platform to drill down on their own supply chains.
- Stay Policy-Aware: Changes to tariffs could come suddenly, whether from new executive orders or court rulings. Staying informed allows businesses to pivot faster and avoid costly surprises.
Governor Newsom isn’t stopping at legal action. He’s launching new strategic partnerships with foreign economies to stabilize California’s trade outlook, including a campaign to maintain strong ties with key partners like Canada. These diplomatic and economic efforts aim to safeguard the state’s role as a global economic leader despite growing protectionism.
California’s economic strength is its global connectivity—but that strength is now under threat. The new tariffs represent a clear and present danger to industries from San Diego to Sacramento. By pushing back legally and helping businesses adapt, Governor Newsom is not only defending the state’s economy but also reinforcing the importance of lawful, collaborative trade policy. For California businesses, the message is clear: prepare now, diversify smartly, and watch the legal battle closely—it could determine the future of trade and growth in the Golden State.
