California’s trade trends continued along their positive trajectory coming into the end of 2024, even as worries about the incoming Trump administration’s tariff threats intensify.

“History suggests that the President-Elect will not act immediately on these threats,” said Christopher Thornberg, Founding Partner of Beacon Economics. “But the threat is real. Since imported products are largely priced to U.S. market levels, we are less concerned about the direct impact of tariffs on incoming goods and more concerned about potential retaliation from trading partners on California’s exporters.”

California’s merchandise export trade was nominally valued at $15.751 billion in November, a 5.8% gain over the $14.896 billion recorded in the same month one year earlier, according to a Beacon Economics’ analysis of official trade statistics released this morning by the U.S. Census Bureau’s Foreign Trade Division. California’s share of the nation’s merchandise export trade remained steady at 9.0%.

Exports of California’s manufactured goods dipped by 0.4% to $8.958 billion from $8.995 billion last November. Meanwhile, the state’s exports of non-manufactured commodities jumped by 13.8% to $2.400 billion from $2.109 billion.

Re-exports soared by 15.8% to $4.392 billion from $3.792 billion one year earlier.

California’s exports in the first eleven months of 2024 amounted to $168.366 billion, a 2.8% gain over the $163.834 billion in goods the state’s industries shipped abroad during the same period in 2023.

“November’s increase in California’s merchandise exports came despite the continuing decline of electric vehicle shipments, especially from the Port of San Francisco, which has long served as the principal export terminal for Tesla’s manufacturing plant in nearby Fremont,” said Jock O’Connell, Beacon Economics’ International Trade Advisor.

California Imports Surge

Importers striving to get ahead of higher tariffs on foreign merchandise continue to drive an intensive import trade. The U.S. Commerce Department reports that California was once again the nation’s leading state-of-destination for U.S. imports. The state’s 15.3% share of all U.S. merchandise imports in November was valued at $41.929 billion, an 8.6% increase over the $38.622 billion in imported goods in November 2023.

• Manufactured imports this November increased by 8.6% to $37.109 billion from $34.183 billion one year earlier.
• Non-manufactured imports were valued at $4.819 billion, up 8.6% from the $4.439 billion in November 2023.

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., September-November) 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 shows annual changes in California’s merchandise exports. In recent years, eleven commodity groups have posted three-month export totals exceeding $1 billion. Of those, all but three recorded nominal year-over-year gains in the latest three months.

DESTINATIONS

Fourteen overseas markets recorded one billion dollars or more in imports from California in the last three months:

In the September-November period, the state’s overall export trade with the economies of East Asia gained by 4.3% to reach $16.077 billion from $14.418 billion. That increase occurred despite declines in shipments to China and Hong Kong; surging shipments to Malaysia helped counter the decline.

Meanwhile, California’s exports to Europe leapt by 19.6% to $10.028 billion from $8.384 billion one year earlier. The state’s exports to Latin America and the Caribbean (excluding Mexico) rose by 6.5% to $2.426 billion from $2.277 billion. But California’s negligible export trade with the nations of Sub-Saharan Africa surged by 34.6% to $226.8 million from $168.5 million.

Mexico and Canada, America’s partners in the North American Free Trade Area, together accounted for 27.2% of California’s $48.140 billion merchandise export trade in the last three months as the nominal value of shipments to our immediate neighbors edged down by 4.8% to $13.085 billion from $13.744 billion. 

MODE OF TRANSPORT

In the past three months, 48.9% of the state’s $48.140 billion merchandise export trade was shipped by air, while waterborne transport carried 25.5% of the outbound trade. The balance of the state’s exports largely travelled overland to Canada and Mexico.

THE PORTS

Trade through California ports has grown over the last five years, however the mode by which goods are moved has shifted. Airports and Seaports continue to be the primary way by which goods are exported from California ports, but exports have declined for Seaports (-5.9%) over the last five years. In contrast, exports through land ports have grown a substantial 48.6% during this period. Imports moving through California ports are up 39.8% over the last five years. Seaports continue to account for the majority of imports into the state, however those imports have only grown 36.9% over the last five years. Imports through California Airports have grown at a quicker pace (56.5%) during this time.

• Total export trade at California ports from September 2024 to November 2024 was up 9.8% over the same period last year. Exports were up through Seaports (6.3%), Land ports (9.6%), and Airports (13.2%).
• Total import trade at California ports from September 2024 to November 2024 was up 16.8% over the same period last year. Imports were up through Airports (23.7%), Land ports (4.1%), and Seaports (16.5%).
• California ports accounted for 11.1% of all exports from the United States between September 2024 and November 2024, up 0.8 percentage points over the same period one year ago.
• California ports accounted for 21.6% of all imports into the United States between September 2024 and November 2024, up 2.0 percentage points over the same period one year ago.
• Container counts at the Port of Long Beach grew 21.1% from November 2023 to November 2024.
• Container counts at the Port of Los Angeles grew 16.2% from November 2023 to November 2024.

THE OUTLOOK

There is a widespread expectation within the international trade community that President-Elect Donald Trump will move to quickly impose the higher tariffs he promised during the campaign. Certainly, the substantial volumes of laden shipping containers that have been arriving at U.S. ports in recent months strongly suggest that the nation’s importers anticipate higher duties on foreign merchandise shortly after Mr. Trump’s inauguration on January 20.

That is a reasonable expectation if overseas orders are being placed by importers reading the often-hyperventilating business press, which has been promising profound disruptions in trade and diplomatic relations driven by a chief executive notoriously uncaring of convention. However, a look back at the first Trump administration reveals a more measured scenario where new tariffs were not part of a Day-One package.

Trump first took office in January 2017, but new tariffs did not come until a year later, when the White House announced higher tariffs on imported washing machines and solar panels. Two months after that, in March 2018, the administration imposed a 25% tariff on imported steel and a 10% tariff on imported aluminum.

Looking ahead, the President-Elect has been more tactical in deploying tariffs than his bravado would suggest.

For California’s exporters, the larger issue is how our principal trading partners will respond to any new or higher levies on imported merchandise. While this is a key concern, in the past, foreign governments have targeted their retaliatory measures at industries or constituencies that are politically important to those wielding in power in Washington, D.C. The fact that California lacks its former policymaking clout could help insulate the state’s industries from targeted retaliation.