Buffett made it clear earlier this year that he does not support tariffs.
Someone has to cover the cost of tariffs.
In its Aug. 2 quarterly report, Berkshire Hathaway noted concern about the impact of tariffs on its operating businesses.
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Warren Buffett’s Berkshire Hathaway (NYSE: BRK.A)(NYSE: BRK.B) reported its second-quarter earnings results on Aug. 2. Buffett will be stepping down as the company’s CEO in a little under five months, and investors are likely paying close attention to the last reports with him at the helm. Although the company’s operating results came in strong, investors may have been disappointed that Berkshire didn’t repurchase any of its own stock.
In addition to watching the usual earnings metrics, investors are always parsing through Buffett’s letters and Berkshire’s regulatory filings on the hunt for clues about how Buffett and his team feel about the economy. In its Q2 report, Berkshire specifically mentioned President Donald Trump’s tariffs. The company’s warning to Wall Street only grew louder.
While Buffett had expressed concerns about the U.S. trade deficit with other countries in the early 2000s, he and Berkshire have made it pretty clear that they are not a fan of Trump’s tariff plans.
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Earlier this year, during an interview with CBS, Buffett called tariffs “an act of war to some degree.” He also said that the U.S., throughout its history, has significant experience with tariffs, and he believes that over time they are a tax on goods. “I mean the tooth fairy doesn’t pay them,” he said.
About five months later, the tariff drama has wound down, and the market has seemingly gotten used to Trump’s negotiating style of seeming to play hardball and then choosing a tariff rate that tends to be a little bit easier to digest. That said, I think tariff rates have come in higher than most experts and pundits expected. Imports from most countries are looking at a rate of 15%, while imports from more than a few countries currently face rates in the 20% to 40% range, as of this writing.
Make no mistake, those rates are significant and will have an impact. While tariffs are projected to bring in significant revenue for the U.S. government, most experts, including Buffett, view them as a tax that someone has to bear. Additionally, Trump’s constant changing of tariff rates and the resulting uncertainty are likely leading many businesses to hit the pause button on hiring and their capital expenditure plans.