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Trump's levies projected to diminish California's revenues by a substantial $16 billion, according to Newsom's estimates

In anticipation of his budget address, Governor Gavin Newsom expressed accusations, pointing towards President Trump's tariff strategy as the cause for a decrease in California's state income.

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Governor Gavin Newsom accused President Trump's tariff strategy of causing a decline in California...
Governor Gavin Newsom accused President Trump's tariff strategy of causing a decline in California state revenues prior to his budget proposal.

Trump's levies projected to diminish California's revenues by a substantial $16 billion, according to Newsom's estimates

Revamped Read

Talkin' Turff with Gav: How Cali's Losin' Millions Due to Tariffs, According to Newsom

SACRAMENTO— Call it the "Trump Slump." That's what Cali's bigwigs are clamoring about, as they're predictin' a revenue shortfall for the Golden State—all thanks to President Trump's tariff policies.

In a move that's shakin' things up before the presentation of his revised 2025-26 state budget plan, Newsom's crew is claimin' that Trump's tariffs'll drop California's revenue by a staggering $16 billion between January 2025 and June 2026.

It ain't all doom and gloom though. Personal income tax and corporate tax receipts in Cali have been cashin' in $6.8 billion above predictions through April. But, Newsom's team reckons the overall revenue will be less than it'da been due to the economic impact of Trump's tariffs.

The lawsuit, labeled the "Trump Slump," was dropped just a day before Newsom was expected to declare a deficit for Cali in the year ahead. The new shortfall joins the $27.3 billion in financial remedies, includin' $16.1 billion in cuts and a $7.1-billion withdrawal from the state's rainy day fund, that lawmakers already agreed to make in 2025-26.

This ain't the first time Newsom's chopped the budget. The last two years have seen spendin' reductions after dedicatin' more funds to programs than the state had to spare. Poor projections, the balloonin' cost of Dem promises, and a lack of long-term sweeping cuts have helped add to the deficit.

Trump declared a series of tariffs in April, on all imported goods, higher taxes on items from Mexico, Canada, and China, and specific levies on products and materials such as autos and aluminum. The president's backed down from some of his tariffs, but Newsom alleges that the policies and economic uncertainty will lead to higher unemployment, inflation, lower GDP projections, and less capital gains revenue for California.

Cali's been throwin' down in court. They filed a lawsuit last month, assertin' that Trump lacks the authority to impose tariffs on his own. On Tuesday, the state said they'd seek a preliminary injunction to freeze the tariffs in federal court.

More to Chew On

  • Cali dubbed No. 1 tourist destination, but might be hit by the "Trump Slump"
  • Newsom sues Trump's tariffs, claimin' billions in damage for Cali
  • Trump's volatile trade policy presents new challenges for Cali's budget

Bits 'n' Pieces

  • California's Lawsuit Status: Governor Gavin Newsom and Attorney General Rob Bonta filed a lawsuit challenging President Trump's authority to unilaterally impose tariffs under the International Economic Emergency Powers Act. The lawsuit asserts that President Trump lacks the legal power to enact broad tariffs, which have disrupted supply chains, inflated costs, and inflicted billions in damages on the California economy.
  • The Expected Economic Impact: Key industries such as agriculture and technology are particularly exposed, with potential losses running into billions. The tariffs are projected to shrink the US economy annually by $100 billion, which would further exacerbate economic instability.
  • Support and Reaction: The lawsuit has received support from various stakeholders, including state leaders and business representatives. They argue that the tariffs constitute an unlawful economic chaos that needs immediate action to protect California's residents and businesses. The lawsuit is part of a broader effort by California to oppose Trump's policies, as the state is suing him at a rate almost double that of his first term.
  1. The economic impact of President Trump's tariffs is not limited to California's budget deficit, as they are also predicted to impact key industries like agriculture and technology, incurring potential losses in billions.
  2. The health sector in California may also be affected, as higher costs due to tariffs could lead to increased inflation, potentially affecting the general public's well-being.
  3. The ongoing legal battle between Governor Gavin Newsom and President Trump over the tariffs extends beyond California's budgetary concerns, with the state seeking a preliminary injunction to freeze the tariffs in federal court.
  4. California's lawsuit against Trump's tariffs is part of a broader political stance, reflecting the state's stance against some of the president's policies, with the number of lawsuits filed during his term almost doubling.
  5. With the Los Angeles Rams set to play in the Super Bowl, a key general news event, the potential economic impact of President Trump's tariffs on California could intertwine with the state's political narrative, drawing national attention to the issue.

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