February 5, 2025
California Trade Report
Beacon Economics’ monthly analysis of California’s international trade activity
Welcome to the California Trade Report, Beacon Economics’ monthly analysis of California’s international trade activity. This report analyzes data released by the U.S. Census Bureau’s Foreign Trade Division and pinpoints important trends in the state’s import/export industry, identifying potential effects on the state’s economy. The report is only a sampling of the kind of economic research and data analysis available from Beacon Economics.
CALIFORNIA EXPORTS OUTPACE THE NATION
California’s merchandise export trade was nominally valued at $14.977 billion in December, a slender 0.6% gain over the $14.883 billion recorded in the same month one year earlier, according to Beacon Economics’ analysis of official trade statistics released this morning by the U.S. Census Bureau’s Foreign Trade Division.
Over the same period, U.S. exports in December actually slipped to $166.072 billion from $167.724 billion. As a result, California’s share of the nation’s merchandise export trade rose to 9.0% from 8.9% one year earlier.
“While trade flows continue to look up, the recent announcements of tariffs on China, Canada, and Mexico, should make it clear that it will not be business as usual over the next few years,” said Christopher Thornberg, Founding Partner of beacon Economics. “The 30-day reprieve on our NAFTA partners may imply that President Trump is looking for a quick political win rather than genuinely trying to upend global trade—but only time will tell.”
Exports of California’s manufactured products in December inched up by 0.1% year-over-year to $9.325 billion from $9.315 billion. Meanwhile, the state’s exports of non-manufactured commodities declined by 9.1% to $1.881 billion from $2.069 billion. Re-exports grew by 7.7% to $3.771 billion from $3.500 billion in December 2023.
California’s exports in all of 2024 amounted to $183.343 billion, a 2.6% gain over the $178.717 billion in goods the state’s industries shipped abroad in 2023.
“What’s remarkable in light of the political slander being hurled at California is that exporters in the state outpaced their peers nationally in December,” said Jock O’Connell, Beacon Economics’ International Trade Advisor. “Someone’s got their narrative wrong.”
California Imports Grow
The U.S. Commerce Department reports that California was again the nation’s leading state-of-destination for U.S. imports. The state’s 14.8% share of all U.S. merchandise imports in December was valued at $42.214 billion, a 15.4% bump over the $36.565 billion in imported goods in December 2023.
- Manufactured imports in December leapt by 16.5% to $37.668 billion from $32.348 billion one year earlier.
- Non-manufactured imports were valued at $4.546 billion, up by 7.8% from the $4.218 billion in non-manufactured imports the state absorbed in December 2023.
- For the entire year, $491.478 billion in imports arrived in the Golden State, up 9.3% from the $449.485 billion in imports during 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., October-December) 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 four 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 latest quarter, the state’s overall export trade with the economies of East Asia slipped by 0.4% with the value of shipments totaling $15.860 billion compared to $15.916 billion one year earlier. Meanwhile, California’s exports to the European Union strengthened by 14.3% to $9.442 billion from $8.260 billion one year earlier. The state’s exports to Latin America and the Caribbean (excluding Mexico) jumped by 6.0% to $2.425 billion from $2.289 billion. California’s shipments to the nations of Sub-Saharan Africa doubled by 103.8% to $333 million from $163 million.
Mexico and Canada, America’s partners in the North American Free Trade Area, together accounted for 26.6% of California’s $47.211 billion merchandise export trade in the fourth quarter of the year as the nominal value of shipments to our immediate neighbors edged down by 2.8% to $12.543 billion from $12.901 billion.
MODE OF TRANSPORT
In the latest quarter, 47.7% of the state’s $47.211 billion merchandise export trade was shipped by air, while waterborne transport carried 26.8% 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 remained stable 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 at Seaports (-4.9%) during the last five years; in contrast, exports by Land Ports have grown a substantial 50.6%.
Imports through California ports are up 41.1% over the last five years and Seaports continue to account for the majority of import activity. However, imports through the state’s Seaports have only grown 37.9% over the last five years, while imports through Airports (58.7%) have grown at a quicker pace.
- Total export trade at California ports from October 2024 to December 2024 was up 8.8% over the same period last year. Exports were up through Seaports (4.5%), Land Ports (11.6%), and Airports (12.1%).
- Total import trade at California ports in December was up 18.9% over the same period last year. Imports were up through Airports (28.3%), Seaports (17.4%), and Land Ports (9.0%).
- California ports accounted for 11% of exports from the United States from October 2024 to December 2024, up 0.7 percentage points over the same period one year ago.
- California ports accounted for 21% of imports into the United States from from October 2024 to December 2024, up 1.3 percentage points over the same period one year ago.
- Container counts at the Port of Long Beach grew 26.2% from December 2023 to December 2024.
- Container counts at the Port of Los Angeles grew 18% from December 2023 to December 2024.
THE OUTLOOK
We have been both amused and dismayed by many of the generally buoyant international trade forecasts that several major banks, Wall Street analysts, government agencies, and institutions like the World Trade Organization have issued over the past few weeks. Here are some examples.
The World Economic Outlook from International Monetary Fund issued on January 17 looks for global economic growth to be at 3.3% “both in 2025 and 2026, broadly unchanged from the October 2024 World Economic Outlook (WEO) forecast with an upward revision in the United States offsetting downward revisions elsewhere.”
The latest outlook from the World Trade Organization posits that world merchandise trade volume will grow by 3.0% in 2025”.
Also, in December, the Organization for Economic Cooperation and Development (OECD) weighed in with its own upbeat forecast: The world economy is poised to grow 3.3% in 2025 and 2026 as lower inflation, job growth and interest rate cuts help offset fiscal tightening in some countries.
More narrow-gauge outlooks have likewise been optimistic. The U.S. Department of Agriculture, for example, issued a forecast in November that, among other things, looked for “Exports to Mexico, the top U.S. agricultural market, are forecast $700 million higher from the August projection to $29.9 billion, driven by continued robust demand for a range of products. The export forecast for Canada is $300 million higher to a record-high $29.2 billion, supported by a strong economic outlook.”
What is most evident is that these organizations, having invested considerable sums of money and personnel resources into modeling the global economy and developing outlooks to guide their operations as well as those of their clients, tend to remain largely indifferent to developments that are not easily modeled, like the return of the mercurial and impulsive Donald Trump to the White House.
If nothing else has become witheringly obvious in the past couple of weeks is that the trade policies of the world’s most powerful economy are in the hands of an iconoclast who seems eager to topple existing arrangements and to bend reality to suit his preferences.
Beacon Economics is inclined to side with a December forecast from the United Nation’s Trade & Development Agency that warned: “The 2025 trade outlook is clouded by potential US policy shifts, including broader tariffs that could disrupt global value chains and impact key trading partners. Such measures risk triggering retaliation and ripple effects, affecting industries and economies along entire supply chains. Even the mere threat of tariffs creates unpredictability, weakening trade, investment and economic growth.”
In last month’s California Trade Report, we expressed a hope that the days following President Trump’s inauguration would produce greater clarity about his economic and trade policy intentions. We are still anxious to see that clarity rather than daily, if not hourly, shifts in policy pronouncements. Were the threatened tariffs against Canada and Mexico more theatrical than tactical? Is the 10% tariff on Chinese imports merely the opening gambit in negotiating a future trade pact with Beijing? How serious are the president’s overtures toward sovereign control of Greenland and Gaza?
Amidst a whirlwind of executive orders and social media posts from the White House, just about the only thing of which we can be reasonably certain is that the issue of climate change will not play an important role in this administration’s trade policy.
Note: The U.S. Commerce Department has been publishing state-of-destination import statistics since 2008. Beacon Economics has long felt that state import data provide a highly misleading indication of the state in which imported goods were ultimately consumed. As a major gateway for the nation’s foreign trade, California has consistently been credited with an out-sized share of U.S. merchandise imports. However, we now believe that the process by which state-of-destination import statistics are compiled has become stable enough to be used to measure relative increases or decreases in the value of imported goods consumed or otherwise used by residents or businesses located in California. We strongly emphasize that we are solely interested in identifying trends. We continue to believe it is not useful to use state export and import statistics to calculate a state trade balance.
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