Warren Buffett, CEO of Berkshire Hathaway, known as the 'Oracle of Omaha', has issued a warning to Wall Street about President Donald Trump's tariff policy.
On the 9th (local time), according to investment-focused media Motley Fool, Buffett expressed concerns about the negative impact of tariffs on corporate operations during Berkshire Hathaway's quarterly earnings announcement on the 2nd, stating, "Tariffs are a tax that someone has to bear." He also indicated that Berkshire Hathaway is concerned about the impact of tariffs on its business, warning that they could turn into taxes on goods. Buffett noted that uncertainty due to tariffs could temporarily halt companies' hiring and capital expenditure plans.
Buffett has previously expressed negative views about tariffs. Earlier this year, in an interview with CBS, he criticized tariffs as "a form of warfare." He warned that "the United States has significant historical experience with tariffs, and over time, tariffs will turn into taxes on goods." He added, "Fairies don't pay tariffs."
Despite President Trump's tough negotiating style calming some of the tariff controversy, concerns remain in the market about the high tariff rates he has set. Currently, a 15% tariff is applied to products imported from most countries, while some countries face high rates ranging from 20% to 40%. Buffett warned, "This rate is quite large and will have a significant impact."
Berkshire Hathaway clearly mentioned economic uncertainty related to tariffs in its second-quarter earnings report, stating that it is difficult to predict the impact of such uncertainty on corporations. Specifically, it warned that it cannot reliably forecast the impact on business due to changes in product availability, supply chain costs and efficiencies, and customer demand. This warning has drawn particular attention, especially since Buffett usually refrains from political statements.
Berkshire Hathaway is the world's largest investment firm, holding a $300 billion stock portfolio, and operates numerous subsidiaries across various industries, including insurance, energy, railroads, consumer goods, and technology. The management of Berkshire Hathaway, with its extensive business operations, is regarded as having deep insights into economic conditions. Nonetheless, Buffett warned, "The impact of tariffs on overall business operations is significant."
Berkshire Hathaway is particularly concerned about rising inflation and increasing unemployment rates. It has been noted that inflation is rising in sectors heavily affected by tariffs, such as clothing, toys, and electronics. While tariffs may cause a one-time inflation spike, there are concerns that prolonged uncertainty could lead corporations to halt production for longer durations.