As World Trade Month begins, the California Chamber of Commerce is emphasizing the significance of international trade in maintaining economic growth.
World Trade Month activities each May provide many opportunities to acknowledge the importance of global trade to the economies of California and the United States. The U.S. Department of Commerce points out that World Trade Month celebrates how international trade unlocks new business opportunities, creates jobs, and strengthens the U.S. and global economy.
The CalChamber encourages interest in and understanding of international trade as a vital part of our economy, together with promoting a national agenda on free trade. Further, it is important to promote education of California’s citizens, legislators, and businesses about the benefit of trade to the state’s economy.
Thanks to continued economic growth and strong performances in a variety of industry sectors, California has again ranked as the fifth largest economy in the world. On a per capita basis, California is the second largest economy in the world. (See U.S. Department of Commerce Trade Stats Express.)
Governor Gavin Newsom said: “California continues to punch above its weight, overperforming all but a handful of the largest countries in the world. And with our unparalleled combination of innovation, higher education, a talented workforce, diverse industries, and unparalleled natural resources, we will continue to do so well into the future.”
In 2023, California GDP was nearly $3.9 trillion — a growth of just over 6% from 2022. The top four national economies are the United States ($27.4 trillion), China ($17.7 trillion), Germany ($4.4 trillion) and Japan ($4.2 trillion).
Also, India’s economy continues accelerated growth. India has been the fastest-growing large economy and remained the sixth largest economy since overtaking the United Kingdom in 2021 and is close behind California.
California Trade Statistics
In 2023, California exported $178.717 billion to 227 foreign economies. California’s top five export markets remained the same in 2023; in order: Mexico, Canada, China, Japan and South Korea.
As in 2022, there was some shuffling with the next five export partners to round out the top 10. Taiwan remained California’s sixth largest export partner, with the Netherlands in seventh place, followed by Germany. The United Kingdom returned to ninth place after dropping to 11th in 2022, and Hong Kong remained in 10th place.
In 2023, California imported $449.485 billion worth of goods from the world. California’s top sources of imports are China, Mexico, Taiwan, Vietnam and Japan.
Global Trade Forecasts
The International Monetary Fund’s (IMF) World Economic Outlook was released in April, providing 2023 economic data for countries and regions. According to the IMF, global recovery is steady but slow and differs by region.
The IMF’s baseline forecast is for the world economy to continue growing at 3.2% during 2024 and 2025, at the same pace as in 2023.
At the same time, the World Trade Organization (WTO) forecasts a rebound in global trade but warns of downside risks.
Global goods trade is expected to pick up gradually this year following a contraction in 2023 that was driven by the lingering effects of high energy prices and inflation, WTO economists said in a forecast released on April 10.
The volume of world merchandise trade should increase by 2.6% in 2024 and 3.3% in 2025 after falling 1.2% in 2023, the WTO said. Regional conflicts, geopolitical tensions and economic policy uncertainty pose substantial downside risks to the forecast, according to the WTO.
Election Year / Trade Policies
This year, more voters around the world than ever before will head to the polls in regional, legislative and presidential elections that could change political institutions, the economy, and international relations. More than 60 countries representing half the world population of 4 billion people will hold elections that may prove consequential for years to come.
The role of international trade and investment as major parts of any economic engine that broadly benefits businesses, communities, consumers and government is a subject of concern.
As the United States heads toward a presidential election, there are a number of international trade topics on the table: the U.S. dollar, tariffs and trade agreements.
U.S. Dollar
The strong U.S. dollar gives American consumers more buying power on the international market to buy goods from countries that have slower economic growth and recovery. At the same time, however, the strength of the dollar makes U.S. exports more expensive, thus raising the trade deficit.
The CalChamber supports achieving and maintaining a stable and competitive relationship of the U.S. dollar and the currencies of our major trading partners.
Tariffs
While the CalChamber wholeheartedly supports efforts to ensure our trading partners adhere to fair and transparent trade practices and are held accountable when they violate international rules, raising tariffs results in higher prices to the consumer for the specific product protected and in limited product choices for consumers.
Further, increased tariffs cause a net loss of jobs in related industries, retaliation by U.S. and California trading partners, and violate the spirit of our trade agreements.
Trade Agreements
The CalChamber believes strengthening economic ties and enhancing regulatory cooperation through agreements with our top trading partners that encompass both goods and services, including financial services, is essential to eliminating unnecessary regulatory divergences that may act as a drag on economic growth and job creation.
We further support trade agreements which ensure that the United States may continue to gain access to world markets, resulting in an improved economy and additional employment of Americans.
We also support actions designed to eliminate barriers that impede U.S. and California commerce domestically and abroad by aggressively negotiating fair and equitable market access for California agriculture, high tech and manufactured products, as well as services.
CalChamber Position
The CalChamber supports expansion of international trade and investment, fair and equitable market access for California products abroad, and elimination of disincentives that impede the international competitiveness of California business.
California’s economy is diverse, and the state’s prosperity is tied to exports and imports of both goods and services by California-based companies, to exports and imports through California’s transportation gateways, and to movement of human and capital resources.
