Buffett Warns Against Tariffs, Calls Them an Act of Economic Aggression
Billionaire investor and Berkshire Hathaway CEO Warren Buffett has voiced concerns about the economic impact of tariffs, describing them as a form of economic warfare. Speaking in an interview with CBS, Buffett explained that while tariffs are often used in trade negotiations, they ultimately function as a tax that falls on consumers.
Warren Buffett, known as the “Oracle of Omaha,” stressed that tariffs disrupt global trade by increasing the cost of imported goods, which in turn leads to higher prices for consumers. He humorously pointed out that “The Tooth Fairy doesn’t pay ‘em!”—emphasizing that consumers and businesses ultimately bear the financial burden. The investor highlighted the importance of considering the long-term consequences of economic policies, urging policymakers to ask, “And then what?” when implementing tariffs.
Tariff Policies and Global Trade Tensions
The latest round of tariffs comes amid shifting U.S. trade policies, with the administration implementing new taxes on imports from major trading partners, including Canada, Mexico, and China. A 25% tariff is set to take effect on imports from Canada and Mexico, while tariffs on Chinese goods have been raised from 10% to 20%.
These measures have sparked concerns of a broader trade conflict, with China responding with retaliatory tariffs. Other global economic players, including the European Union, are also under scrutiny as the U.S. explores “reciprocal tariffs” on countries imposing duties on American goods. Economists warn that these policies could lead to increased prices for everyday goods, from electronics to automobiles, at a time when consumer confidence is already showing signs of decline.
Commerce Secretary Howard Lutnick dismissed Buffett’s concerns during an interview, calling his remarks “silly.” Lutnick suggested that tariffs could eventually replace the need for the Internal Revenue Service (IRS), claiming—incorrectly—that the IRS was created during World War I. However, historical records show that the agency was established in 1862 during the Civil War, and the federal income tax was formally introduced in 1913, predating the war by four years.
Buffett’s Economic Perspective and Market Moves
Warren Buffett has long been critical of protectionist trade policies, previously stating that such measures could harm the U.S. economy. In 2016, he openly criticized the idea of tariffs, calling them a “very bad idea.” His recent comments come as Berkshire Hathaway continues to accumulate record levels of cash, signaling caution in the current economic climate.
By the end of the fourth quarter, Berkshire’s cash holdings had reached an all-time high of $334.2 billion, nearly doubling from the previous year. Meanwhile, the company reduced its stock holdings in major firms like Apple and Bank of America. Despite this, Warren Buffett reiterated his confidence in the U.S. market, calling it “the best place” to invest and emphasizing his belief in the country’s long-term economic stability.
