Assembly select committee hears how tariffs and shifting policy are squeezing California's Asia trade and tourism

SACRAMENTO ' The Assembly's new Select Committee on Asia, California Trade and Investment opened its first hearing with witnesses from state government, consular offices, business groups and economists warning that recent federal tariffs and policy uncertainty are already raising costs for businesses, disrupting supply chains and reducing international visitation to California.

The hearing was convened by the committee chair at the California State Assembly and featured remarks from Lieutenant Governor Eleni Kounalakis, who said California must continue to engage directly with Asian partners. "California is not a passive actor," Kounalakis told the committee, noting the state's role hosting the 2023 APEC summit and citing two-way trade and investment statistics.

Why it matters: California is deeply exposed to Asia through trade, tourism, higher education and foreign investment. Multiple witnesses tied recent federal tariff actions and shifting trade policy to concrete local impacts ' from reduced airline lift and fewer international students to delayed manufacturing projects and smaller convention business ' that affect jobs and tax revenue across the state.

Several witnesses offered numbers during the hearing. Kounalakis said California exported about $71 billion in goods to Asia in 2024 and that two-way trade with Asia exceeded $377 billion in 2024. She also cited an Axios estimate that California businesses and consumers paid roughly $11.3 billion in tariff-related costs during the first six months of the year. Los Angeles County Economic Development Corporation and World Trade Center Los Angeles president Steven Chung said the state hosts about 18,963 foreign-owned enterprises supporting roughly 814,000 direct jobs and contributing about $90 billion in wages.

Economists framed tariffs as an added tax and a source of uncertainty. "Tariffs are taxes on imports," said Kyle Handley, an economist at the University of California, San Diego, explaining that much of California's private sector operates in integrated global supply chains and that higher input costs tighten margins and delay investments. Handley and other panelists warned that repeated or large tariff shifts cause firms to postpone hiring and capital spending, reducing future growth even if headline trade volumes appear steady.

Ports, logistics and manufacturing came up repeatedly. Steven Chung described the ports' role: "The Port of Los Angeles and Port of Long Beach are the number 1 and number 2 container ports in North America controlling about 35% of all goods coming into the United States," adding that blank sailings and canceled vessel calls tied to tariff volatility have cut activity and ripple through longshore, trucking and warehousing jobs.

Tourism and education leaders also flagged damage to visitor flows and student enrollment. Carolyn Battetta of VISIT California said international visitors spent about $26 billion in the state in 2024 and that inbound visitation showed a roughly 9.2% drop in 2025 to date; she noted persistent weakness in travel from China since the pandemic. Battetta urged coordinated marketing and trade missions with a long-term brand strategy to restore international travel.

Business and small-business voices described practical effects. Rodney Fong of the San Francisco Chamber and small-business advocates said businesses are reworking supplier contracts, delaying orders for specialized equipment and halting hiring as input prices rise and prices for finished goods become less predictable. Alvin Lai, who operates hospitality businesses, described a six-month construction delay for a project when fluctuating tariff-driven prices for brewing equipment stopped production and hiring.

Witnesses outlined actions the state can take that do not require federal authority: coordinate and promote trade missions and sister-city exchanges, streamline permitting and infrastructure projects to lower the cost of doing business, invest in port and freight throughput, scale export assistance for small firms, and expand programs that connect small businesses to trade opportunities and capital (for example, California's Small Business Development Center network). Glenn Fukushima, a trade analyst on the panel, urged sustained subnational engagement with Asian partners and suggested California press for consistent, rules-based trade approaches.

No formal decisions or votes took place at the hearing. Members said the committee will continue to gather testimony and consider follow-up hearings in Los Angeles. Several members also raised concerns about anti-Asian harassment and public-safety impacts on AAPI communities, saying that those trends can also affect tourism and business sentiment.

The committee invited further input from business groups, port authorities and local trade organizations; members said they would use the testimony to develop potential state-level policy options that could "tariff-proof" California's economy by lowering costs and encouraging investment even while federal policy remains unsettled.

Looking ahead, committee members said they will pursue additional hearings and invite state agencies, foreign consular offices and industry groups to offer more detailed proposals on trade promotion, port infrastructure and targeted supports for small and minority-owned businesses.