California’s merchandise export trade was nominally valued at $14.799 billion in February, a robust 7.3% gain over the $13.798 billion recorded in February 2024, 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 February edged up by only 0.1% to $167.609 billion from $167.420 billion. As a result, California’s share of the nation’s merchandise export trade rose to 8.8% from 8.2% one year earlier.

By comparison, exports in February from Texas actually declined by 1.3%.

Exports of California’s manufactured products in February increased by 5.8% year-over-year to $9.117 billion from $8.618 billion. Meanwhile, the state’s exports of non-manufactured commodities were down by 3.5% to $1.791 billion from $1.855 billion. Re-exports jumped by 17.0% to $3.891 billion from $3.325 billion in February 2024. 

“This may be the last bit of positive trade news we will be reporting for quite a while,” said Jock O’Connell, Beacon Economics’ International Trade Advisor. “There can be no doubt that President Trump’s new tariffs will severely limit the ability of California businesses to sell their products abroad.”

California Leads Nation On Imports… Again

California accounted for one-eighth of all U.S. merchandise imports in February.

The U.S. Commerce Department reports that California was again the nation’s leading state-of-destination for imported goods. The state’s 12.3% share of all U.S. merchandise imports in February was valued at $35.451 billion, a 2.4% gain over the $34.617 billion in imported goods in February 2024.

• Manufactured imports in February rose by 3.8% to $31.319 billion from $30.176 billion one year earlier.
• Non-manufactured imports were valued at $4.132 billion, down by 7.0% from the $4.442 billion in non-manufactured imports the state absorbed in February 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., December-February) 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. In the latest three-month period, that number has fallen to ten as exports of Waste & Scrap slipped below the billion-dollar mark. Of the remaining ten categories, five recorded nominal year-over-year gains in the latest quarter.

DESTINATIONS

Thirteen overseas markets recorded one billion dollars or more in imports from California in the latest three-month period:

In the latest three months, the state’s merchandise export trade with the economies of East Asia slipped by 1.3% as the value of shipments across the Pacific totaled $14.464 billion, down from $14.650 billion one year earlier.

Meanwhile, California’s exports to the European Union increased by 9.2% to $9.129 billion from $8.363 billion one year earlier. The state’s exports to Latin America and the Caribbean (excluding Mexico) dipped by 0.8% to $2.248 billion from $2.266 billion. California’s shipments to the nations of Sub-Saharan Africa jumped by 60.1% to $248 million from $155 million. 

Mexico and Canada, America’s partners in the North American Free Trade Area, together accounted for 28.3% of California’s $44.718 billion merchandise export trade in the latest three months as the nominal value of shipments to our immediate neighbors gained by 7.1% to $12.661 billion from $11.827 billion.    

MODE OF TRANSPORT

In the latest quarter, 47.9% of the state’s $44.718 billion merchandise export trade was shipped by air, while waterborne transport carried 24.8% of the outbound trade. The balance of the state’s exports largely travelled overland to Canada and Mexico.  

THE PORTS

Trade through California’s 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 (-7.2%) over the last five years while exports through Land Ports have grown a substantial 48.6%.

Imports through California’s ports are up 50.3% over the last five years. Seaports continue to account for the majority of imports into the state, however imports through California Seaports have only grown 44% over the last five years. Imports through the state’s Airports (83.2%) have grown at a quicker pace during the same time.

• Total export trade at California ports from Dec-24 to Feb-25 was up 8.6% over the same period last year. Exports were up through Seaports (0.3%), Land Ports (7.5%), and Airports (17.2%).
• Total import trade through California ports was up 18.5% over the same period last year. Imports were up through Airports (37.7%), Seaports (14%), and Land ports (12.1%).
• California ports accounted for 10.9% of all U.S. exports from Dec-24 to Feb-25, up 0.6 percentage points over the same period one year ago.
• California ports accounted for 18.8% of U.S. imports from Dec-24 to Feb-25, down 1.4 percentage points from the same period one year ago.
• Container counts at the Port of Long Beach grew 13.8% from Feb-24 to Feb-25.
• Container counts at the Port of Los Angeles grew 2.0% from Feb-24 to Feb-25.

THE OUTLOOK

The only thing we can say with any certainty the day after President Trump announced his “Liberation Day” menu of tariffs is that he has a novel understanding of America’s economic history.

His obsession with the U.S. merchandise trade deficit and his ardent desire to right what he considers to be wrongs that other nations have long been perpetrating against the U.S. are driving his trade policymaking. High tariffs, which he associates with the much misunderstood “Gilded Age” of William McKinley’s presidency, are his go-to bromide. The fact that the United States has remained prosperous despite not having run a merchandise trade surplus in half a century does not resonate with the president.

For reasons that remain unclear, President Trump continues to insist that his tariffs will result in a massive transfer of capital from other countries that will enrich the U.S. Treasury, a position disputed by nearly all economists as well as business organizations like the National Retail Federation and the California Chamber of Commerce. Virtually all economists, editorialists, and pundits outside of the president’s circle of advisers recognize that the estimated $6 trillion in revenue the tariffs are projected to generate will ultimately be paid by American businesses and consumers. As the editorial board of the Wall Street Journal opined earlier this week, this would amount to the largest tax hike in U.S. history.

So what will be the impact on California exporters?

Much will depend on how other countries respond to the new tariffs. Unlike the broad tariffs unveiled yesterday, America’s principal trading partners will likely retaliate with tariffs that are strategically aimed to punish U.S. exporters in those regions of the country where Mr. Trump and his congressional allies enjoy high levels of voter support. The theory is that the voices from Republican congressional districts will hold greater influence with the president.

For the most part, “Blue” states like California might be spared simply because there is little to be gained by targeting businesses in states with very little political leverage over White House policymaking. The one major exception in California could involve agricultural exports – and those come from the more conservative “Red” counties of the Central Valley.

While tariffs are on everyone’s mind today, the Trump administration is weighing a far more dangerous proposal that will directly affect California’s international trade community. The U.S. Trade Representatives (USTR) is currently considering whether to impose fees on Chinese-built vessels calling at U.S. seaports (calling refers to when a ship makes a planned stop at a port in the United States).

The ostensible purpose of the fees is to raise revenue to support programs to bolster commercial shipbuilding in the United States. Because China has invested heavily in subsidizing its shipyards, Japanese and Korean shipbuilders now account for far fewer of the commercial vessels being ordered by the world’s major shipping lines. By some estimates, the fee would cover as much as 90% of all commercial freight-carrying ships currently in service. Vessels operated by Chinese companies would face a $1 million port call fee, while vessels built in China would be assessed a $1.5 million fee per port call. In addition, ocean carriers that have placed more than half of their new vessel orders with Chinese shipyards would be charged a $1 million port entry fee. USTR’s proposed port fees could add $600–$800 per container, which would double the cost of shipping U.S. exports and would hit American farmers particularly hard, according to the World Shipping Council.

In addition to raising ocean transport charges, the fee structure would likely drive more trade through the largest U.S. seaports, limiting the options exporters would have for transporting their goods to overseas markets. For example, ocean carriers serving transpacific routes could respond by cutting the numbers of calls at the Port of Oakland, still the primary gateway for shipments of California’s agricultural products. So, apart from the additional costs attributable to the new fees, farm exporters in Northern California would be faced with the further burden of trucking produce to ports in Southern California. For many, that would be a bridge too far.