Newsom is trying to loophole California out of Trump's tariff war

California Gov. Gavin Newsom speaks during a press conference in San Francisco on Oct. 6, 2022. Justin Sullivan/Getty Images

Gov. Gavin Newsom has made one thing clear: He wants nothing to do with President Donald Trump’s tariffs.

The governor announced Friday morning that he wants to find a way for California-made products to make it out unscathed by any potential retaliatory tariffs after Trump announced his “Liberation Day” tariffs earlier this week.

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The new tariff plan, unveiled Wednesday, includes a 10% baseline tax on all imports and potentially higher rates for dozens of other countries based on the White House’s determination. The trade war has already escalated, as China struck back Friday with its own 34% tariffs, set to go into effect next week, and the European Union is reportedly deliberating a response of its own.

In a 35-second video posted Friday morning, Newsom announced his intention to insulate California from the fallout. “Donald Trump’s tariffs do not represent all Americans,” Newsom said in the clip on his personal X account. He added that California’s position as “the dominant manufacturing state in America” — which includes the production of electric vehicles and aerospace manufacturing, as well as influence in other industries like artificial intelligence, agriculture and venture capital — puts the state in a powerful but vulnerable position in a global trade war.

Newsom referred to the tariffs as “the largest tax hike of our lifetime” in the text accompanying his post.

In a separate video clip from his official governor’s account, he added to his message: “California is a stable trading partner, and we hope you consider that as it relates to California-made products.” The text accompanying that post read, “California remains open for business.” In a news release, he also declared: “California is not Washington, D.C.”

The governor did not specify in any of his Friday morning missives how a separate trade deal would play out. It is not clear when his office will reveal more details. In a response to an SFGATE inquiry, Newsom’s office said it is “actively engaging” with international partners and said more information will be shared in the coming days and weeks.

Vinod Aggarwal, a professor of international political economy at UC Berkeley, told SFGATE that while Newsom doesn’t have any way to unilaterally change how Trump’s tariffs play out in California, it is “theoretically possible” that countries could decide to exempt the state from retaliatory action.

“Tariffs are tariffs,” Aggarwal said. “If he can convince countries to not tax California imports, more power to him, but I don’t believe that’s going to happen.”

Aggarwal said a more logical move would be for Newsom to recruit a coalition of governors, including Republicans in states that rely heavily on agriculture, to rally against the tariffs and put pressure on the Trump administration to rescind them.

California’s top three export destinations are Mexico, Canada and China, which collectively buy nearly $67 billion worth of California products, according to the release from Newsom’s office. The statement further said the tariffs will be most intensely felt in the California-Baja region and that consumers will be the first to feel the price increases.

Many Californians fear a lasting recession and may already be feeling the fallout of Trump’s tariffs in their stock portfolios. The stock market on Thursday endured its steepest one-day drop since 2020; as of midday Thursday, Apple shares fell by 9%, about $300 billion, and other companies including Nvidia, Microsoft, Meta, Alphabet and Amazon also plummeted. The plunge carried over into Friday: By the afternoon, the S&P 500 had dropped 5.4%, and the Dow Jones Industrial Average had fallen by 5.3%.

SFGATE reached out to the White House for comment on Newsom’s announcement but did not receive a response before publication.