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As Trump has shown, legality doesn't matter if you can drag out the legislative process long enough. Clearly, California withholding taxes will be struck down by the courts, but the damage will be done if it can be dragged out long enough to disrupt the bond market even further than Taco already has.
I think the bigger impact here is how it brings the tax imbalance into the conversation. Look at how effective that argument has been at fuelling Albertan separatism. It's especially effective on Conservatives, who are absolutely suckers for anything that suggests they're getting a bad deal. "We pay too much for too little" is something that he could easily get most of California to rally around.
By pushing this line, Newsom is driving a wedge between California and the US. I couldn't possibly say whether he's actually trying to fuel separatism, or simply gesturing at it as a threat, but that's the implied danger here.
Honestly I fully expect it to just be saber rattling to drag it out until trump capitulates, which he almost always does when the going gets tough.
Newsom is a shoe-in for the democratic candidate for presidency in 2028, and his largely neoliberal policies combined with his charisma make him an obvious choice for the DNC. However I do think the DNC needs to try running a Midwestern Dem from a battleground state sometime because they can really break a lot of the caricatures that the GOP likes to paint on the national stage about Dems
also depends how many other states follow suit, if any.
Although some of his shit gets shut down pretty fast. Some of his immigration stuff got put on ice fast by the SOCTUS.