Gov. Gavin Newsom’s finance team warned in a memo released Tuesday that California expects to lose $16 billion in taxes next year due to President Donald Trump’s tariff plans.
The memo says revenue for the fiscal year beginning in July will fall by 4% from the state’s previous forecast. Staff link slides to stock sales that hit Wall Street after Trump pushed widespread tariffs on April 2nd.
Authorities have destroyed such predicted losses. Approximately $10 billion less than capital taxes, $2.5 billion less than corporate taxes, and about $3.5 billion less than personal income taxes related to wages and business profits.
“Trump’s tariff policies have weakened national and state outlook and caused stock losses,” the memo said. Officials add that these factors began dragging California receipts in 2025, erasing the strong cash flow the state saw earlier this year.
Still, revenue for the fiscal year ending in June is more than $6.8 billion compared to Newsom’s last estimate. The memo was released that day, and the rallies led by technology companies pushed our stock into positive territory that year.
Washington and Beijing said Monday that they will temporarily cut each other’s merchandise duties.
Newsom calls the gap “Trump slump.”
Politics The first report of the memo to land a day before the governor was scheduled to be announced next year’s new budget proposal.
California’s budget depends on the wealthiest households. The top 1% of income earners pay almost half of all personal income tax, with much of that money dependent on capital income following the stock market.
The new hit for the Treasury is above the $27.3 billion financial bailout. This includes a $16.1 billion cut and a $7.1 billion removal from the state’s rainy day fund. California’s constitution requires a balanced budget every year. This means that the shortage must be closed. So this is the third year in a row when newspapers m and lawmakers trim their spending after the previous budget allocated more money than the state could spend on various programs.
Trump April Customs They tasked all imported goods, raised taxes on goods from Mexico, Canada and China, and set additional taxes on products such as automobiles and aluminum. The president has eased some of those tariffs, but Newsom argues that the surrounding policies and uncertainty will raise unemployment and inflation, reduce gross domestic product and reduce California’s capital acquiring revenue.
last month California He sued Trump and said he lacked the power to impose all his own tariffs. On Tuesday, state lawyers said they would ask a federal judge to make a preliminary injunction to freeze tariffs while the case moves forward.
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