This post was originally published on this site.
US trade policy changed dramatically in 2025, with higher tariffs applied to trade with most countries, retaliation from trading partners, and a few new trade agreements. These changes have created uncertainty among investors, businesses, consumers, and workers and raised concerns about a significant shock to California’s economy. With ten months of 2025 data now available, a nuanced picture of international trade is now developing, highlighted by shifting partnerships and variable effects.
Between January and October 2025, California’s merchandise trade totaled $559 billion—about $650 million less than the same period in 2024. The difference is attributable to slightly higher exports ($153 billion in 2024 vs. $157 billion in 2025) and slightly lower imports ($407 billion vs. $402 billion).
While imports and exports held steady, California’s trade partnerships are undergoing a notable realignment. Mexico has displaced China as the state’s top trade partner. Trade with China fell from a yearly average of 26% of California’s total commerce between 2010 and 2024 to just above 13% in the first ten months of 2025. Although this decline began in 2019, it accelerated this past year, with a 35% drop in imports and a 31% drop in exports ($102 to $66 billion and $12.4 to $8.6 billion, respectively).
Partially offsetting the decline in trade with China, Taiwan has become California’s third-largest trading partner, with the Golden State importing a growing amount of Taiwanese computer equipment, semiconductors, and other electronic components— from $9.6 billion in 2020 to $38.4 in 2025. Canada has moved up to become California’s seventh-largest trade partner, behind South Korea.
California’s manufacturing exports—which represented 87% of all state exports in 2024—increased by 2.5% in the first ten months of 2025; agriculture, livestock, forestry, and related exports—8% of the total—increased by 4.6%. It is difficult to know what would have happened in the absence of recent policy changes.
However, the data does show a range of effects on exports across California’s trade sectors. For example, the state’s beverage industry—including brewery, winery, and distillery products—has been hit hard by tariff policies. In the first ten months of 2025, California’s beverage exports dropped over 32%, compared to the same period in 2024 (from over $1.3 billion to $880 million). Beverage exports to Canada, which averaged close to a third of California’s yearly total from 2010 to 2024, fell to 16% in 2025, amid a Canadian boycott.
Agricultural products exports are a somewhat different story. Total agricultural exports increased over 4% in the first ten months of 2025, but export destinations have shifted. Agricultural exports to Canada and China—which had been at the top of California’s agricultural export destinations—fell by one billion. This decline has been offset by exports to several European countries as well as to India, Vietnam, and Japan—about $1.2 billion more than 2024. Fruits and tree nuts continue to be California’s most important agricultural exports—$9.8 billion or 80% of total agricultural exports in 2025.
California’s trade landscape remains in flux. Tariffs can affect the broader economy, both in the short and long term—for example, through prices, the labor market, and consumer and firm adjustments. And trade will continue to be shaped by policy developments—from pending court decisions on the legality of the tariffs to retaliation from trading partners. Amid ongoing uncertainty, investors, businesses, and consumers will continue to look for ways to acquire the goods they need and to seek new markets for California’s products.