California's trade did not shrink under the policy turbulence of 2025 and 2026; it moved. Through July 2026, the state's total merchandise trade — imports plus exports — grew 7.3% to $417 billion, per the Public Policy Institute of California. Exports rose 2.8% and imports 9%.
That marks an acceleration, not a slowdown. In the same period of 2025, total trade grew just 2.5%, and across all of 2025 it barely grew at all — 0.1%. The shift happened while Washington rolled out tariffs, negotiated with China, Canada and other countries, and after the Supreme Court struck down tariffs imposed under the International Emergency Economic Powers Act. For related coverage, see What the Congressional Budget Office Actually Does.
The numbers describe a rerouting of physical goods, not an abstract adjustment. Mexico remains the state's top trade partner with little change in its share. China keeps falling behind, driven mainly by a drop in imports. And Vietnam has become California's top source of imports in the first seven months of 2026 — a country PPIC identifies as one route for goods that would otherwise face US tariffs. Readers tracking how tariff revenue actually moves through the system can see How Tariff Revenue Actually Flows Into the Federal Budget.
Where did the growth actually come from?
Two things: a jump in imports and a buildout in technology hardware. Imports grew 9% through July 2026, outpacing export growth of 2.8%. A large part of the import story runs through Taiwan, which California's tech industry is buying from to build AI infrastructure — computer equipment, semiconductors and related hardware. Imports of these products from Taiwan alone reached roughly $49 billion in 2025, per PPIC.
Vietnam's rise to the top import spot is the other half. PPIC attributes some of the decline in China's standing to goods routed through other countries to sidestep US tariffs and other trade barriers. Vietnam is one such country. The sourcing here matters: the routing claim is PPIC's reading of the trade data, not a customs finding against any specific shipment.
The analysis: the state's trade total looks stable because the composition changed fast. A reader looking only at the 7.3% headline would miss that the partner mix behind it is moving — away from China, toward Vietnam and Taiwan. What would change that reading is evidence that the Vietnam growth reflects new final demand rather than rerouted goods; the supplied data does not settle that.
Who is losing ground?
Canada. Exports to California's second-largest export destination fell from an average of 11% of state exports between 2016 and 2024, to 9% in 2025, to 8.3% in 2026. The Canadian government has also implemented counter-tariffs of up to 50% on 648 categories of US goods.
The exposure is bounded. Those 648 categories accounted for at most $3 billion in California exports to Canada in 2025 — 18% of total exports to Canada. Transportation equipment makes up the bulk of the exposed trade value, followed by electronics, which face the steepest rates.
How much does the war in Iran touch California trade?
Less than the headlines suggest, with one important exception. Total trade in 2025 with the countries that rely most on the Strait of Hormuz was $11 billion — 1.7% of California's total trade. Iraq, the United Arab Emirates and Saudi Arabia accounted for more than 90% of that total. Exports to these countries ran $4.3 billion in 2025, or 2.3% of state exports.
The exception is crude oil. The state imported $6.2 billion of crude from the region in 2025 — close to a third of California's total crude oil imports, with 63% of that value from Iraq and 26% from Saudi Arabia. Foreign sources supplied 61% of the crude refined in California last year.
The adjustment is already visible. Through July 2026, oil imports from the region fell from $4 billion in 2025 to $1.8 billion, as the state's total oil imports fell 15%. PPIC notes the state has so far managed to increase oil imports from other trading partners.
Which single product shows the sharpest shift?
Nuts. In 2025, 8.8% of California's total exports in miscellaneous nuts — a customs designation that includes almonds and pistachios — went to the Hormuz-reliant countries, worth $860 million. Through July 2026, that share dropped to 5.7%, or $360 million. It is the clearest product-level signal in the data that the war is rerouting specific goods, not just headline totals.
What would make the resilience fail?
A prolonged closure of the Strait of Hormuz. PPIC's bottom line is that California has diversified its oil suppliers, but an extended disruption of global oil markets could still reach the state through price shocks and reduced access to a key input for economic activity. The institute's framing is conditional: the ability of exporters, importers and policymakers to keep diversifying markets, supply chains and energy sources will determine how well the resilience holds for the rest of the year.
The analysis: the 2026 numbers support a claim about adaptation, not immunity. Trade grew and partners shifted, but the state still draws close to a third of its crude from a region at war. California's broader trade position sits inside national policy currents covered in our policy section and our geoeconomics coverage.
