Why is California launching a lawsuit against Trump tariff hikes?

California Governor Gavin Newsom announced on Thursday that the state is suing the U.S. federal government over its tariff policies, accusing the Trump administration of unlawfully using tariffs to disrupt the Californian economy.

The state is seeking a court ruling declaring the tariffs invalid and prohibiting their enforcement. It is the first challenge to the federal government's tariff measures by a U.S. state.

Why is the Golden State leading the charge in suing the federal government over tariffs? Official data shows the most populous state in the U.S. is the nation's largest importer of goods, and it being hit hard by the tariffs, which have already caused disruptions across multiple industries.

In 2023, the state's GDP reached $3.9 trillion, with total imports and exports in 2024 approaching $675 billion. Major trading partners include China, Mexico and Canada, with exports to China accounting for a significant portion of the state's trade.

Newsom emphasized that California would pursue new strategic trade relationships with international partners, calling on long-standing trade partners to exempt California-made products from any retaliatory measures. He said that federal tariff policies "do not represent the will of the American people."

"California leads the nation as the first state for agriculture and manufacturing, and it's our workers, families and farmers who stand to lose the most from this Trump tax hike and trade war," the governor said.

U.S. tariffs hit Californian businesses hard

The tariffs are particularly damaging to California's almond industry, the largest in the world, which supplies over 80 percent of global almond demand. With more than three-quarters of their product exported, the state's almond farmers are bracing for significant losses.

A California almond farmer told China Media Group (CMG) that the tariffs will increase the cost of their products, which will eventually be passed on to buyers. "Sometimes they are willing to pay that, sometimes, they're not."

Agricultural economists are forecasting major setbacks for the industry, with potential orchard closures and widespread farm losses.

The Port of Long Beach, one of the largest container ports in the U.S., also reported a decline in traffic. Since April, 17 container ships have canceled port calls, and the port anticipates a 20 percent drop in cargo throughput in the second half of 2025 if the tariff policies continue.

California's e-commerce sellers, too, are feeling the pain. Dusty Kenny, an online retailer based in Northern California, explained that her business, which relies on products imported from China, is facing skyrocketing costs due to the tariffs.

She told CMG that the company has tens of thousands products in its warehouse, and if tariffs are imposed on all of them, they'll have to absorb huge costs to avoid raising prices for their customers. She also pointed out that relocating production to the U.S. is impossible, with costs potentially tripling per product.

"The cost is just too high, not 10 percent or 20 percent, but the cost per product could double or triple. When you try to contact U.S.-based manufacturers, they don't even return your calls or emails," said Kenny.