California’s merchandise export trade was valued at $14.440 billion in January, according to a Beacon Economics’ analysis of the latest statistics released by the U.S. Census Bureau’s Foreign Trade Division.

That represented a 3.4% decline from the $14.942 billion in exports the state recorded in January 2025.

Over the same period, however, overall U.S. exports increased by 13.6% to $186.386 billion from $164.026 billion one year earlier. As a result, California’s share of the nation’s merchandise export trade sunk to 7.7% from 9.1%.

Exports of California’s manufactured products in January slumped by a nominal 10.6% year-over-year to $8,240 billion from $9.217 billion. Meanwhile, the state’s shipments abroad of non-manufactured commodities dropped by 7.5% to $1.886 billion from $1.755 billion. Re-exports, however, rose by 8.7% to $4.314 billion from $3.970 billion in January 2025.

“There are two very remarkable things about January’s export trade: Taiwan overtook Canada to become California’s second biggest export market and shipments abroad of agricultural produce exceeded the value of transportation sector exports,” said Jock O’Connell, Beacon Economics’ International Trade Advisor.

California led all other states in merchandise imports in January.

The U.S. Commerce Department reports that California was again the nation’s leading state-of-destination for imported goods. The state’s 15.1% share of all U.S. merchandise imports in January was valued at $39.252 billion, a 9.1% decline from the $43.179 billion imported into California in January 2025. Texas, meanwhile, accounted for 13.5% of America’s merchandise import trade.

•  Manufactured imports in January plunged by 7.5% to $35.274 billion from $38.115 billion one year earlier.
• Non-manufactured imports in January were valued at $3.977 billion, down by 21.5% from the $5.064 billion in non-manufactured goods the state imported in January 2024. 

Please note that Beacon Economics has long taken a skeptical view of the federal government’s state-of-destination statistics. The data’s fundamental shortcoming is that they capture not just goods consumed by California residents or used by California businesses but also a sizable quantity of imported merchandise that is offloaded at California ports but is bound for markets elsewhere in the country.

A CLOSER LOOK AT THE NUMBERS

As always, Beacon Economics advises against reading too much into month-to-month fluctuations in state export statistics, especially when focusing on specific commodities or destinations. Significant variations can occur due to unusual developments or exceptional one-off trades and may not be indicative of underlying trends. For that reason, Beacon Economics compares the latest three months for which data are available (i.e., November – January) with the corresponding period one year earlier. Please note that the numbers cited in this report are nominal values.

LEADING EXPORT COMMODITIES

The table below displays the latest year-over-year changes in California’s merchandise export trade during the latest three-month period. Twelve commodity groups posted three-month export totals exceeding $1 billion.

DESTINATIONS

Thirteen markets recorded one billion dollars or more in shipments from California in the latest three months. Not surprisingly, trade policy discords helped push shipments to Mexico and Canada down by 12.8% from the same period one year earlier. China also continued its precipitous decline as an export destination for California merchandise as both Taiwan and Japan claimed larger shares of California’s export trade than did China. The Netherlands, Germany, and the United Kingdom also claimed places among California’s ‘Top Ten’ export destinations.
 

In the last three months, California’s merchandise export trade with the economies of East Asia inched up by 1.1% as the value of shipments across the Pacific totaled $15.157 billion, up from $14.999 billion one year earlier. Meanwhile, California’s exports to the European Union and the United Kingdom jumped by 7.9% to $9.222 billion from $8.544 billion. The state’s exports to Latin America and the Caribbean (excluding Mexico) slipped by 5.9% to $2.297 billion from $2.441 billion.

Mexico and Canada, America’s partners in the Canada-Mexico-US Free Trade Area, combined to account for 25.2% of California’s $45.582 billion merchandise export trade in the last three months, down from their 28.5% share one year earlier.   

MODE OF TRANSPORT

Over half (51.3%) of California’s merchandise export trade in last three months was shipped by air, while waterborne transport accounted for 26.2% of the state’s outbound overseas trade.

The balance of the state’s exports largely travelled overland to Canada and Mexico. (Containerized seaborne trade, which seems to fascinate the media, accounted for just 19.5% of the total value of California’s export trade.)  

THE OUTLOOK

Forecasting international trade trends has become a fool’s errand. No sooner had the U.S. Supreme Court repudiated most of President Trump’s tariffs than the U.S. joined Israel in an attack on Iran, the full economic impact of which remains to be seen. So, while America’s importers have been suing for refunds of an estimated $130 billion in tariffs that had been collected in violation of the constitution, the country and the world now must contend with spiking fuel costs.

According to the Wall Street Journal and the U.S. Energy Information Administration, the average on-highway price for diesel jumped by 25% in the past week. Reportedly, it was the largest weekly increase in diesel prices since the federal government began tracking fuel prices in 1994.

AAA reports that the current average price for a gallon of diesel in California is $6.21, up from $5.03 a month ago. In Long Beach, truckers serving the Ports of Los Angeles and Long Beach are now paying $6.15 a gallon for diesel, up from $5.43 last week from $5.07 a month ago. Diesel now goes for an average of $6.44 per gallon in the vicinity of the Port of Oakland, up $0.90 a gallon from last week and up 25.3% from a month ago.

Those increases essentially constitute a war tax that, while hitting trucking lines, railroads, airlines, and ocean carriers most immediately, will be passed on to most every business and consumer in the nation. Why? Because diesel fuels every supply chain. The impact of this surge will be pervasive.

To site one example, California’s agricultural economy is especially vulnerable to any increase in fuel prices, from taking delivery of inputs like seeds and fertilizers, to fueling the pumps running irrigation water, to operating tractors and harvesters in the field, to shipping produce to market. Grocery prices increases are likely to soon follow.

Exporters will also face rate surcharges from ocean shipping lines and air cargo carriers. That may not matter much as the myriad uncertainties surrounding the war multiply. We were hoping to pass on some positive news for California’s exporters in this month’s report (that the dollar was much cheaper than it was a year ago), but the war in the Persian Gulf is now eroding that advantage.