TLDR
- Warren Buffett criticized Trump’s tariffs as “an act of war” that function as a tax on goods
- Buffett emphasized consumers ultimately pay for tariffs, stating “the tooth fairy doesn’t pay ’em”
- Trump plans to implement 25% tariffs on Mexico and Canada imports and additional tariffs on China starting March 4
- Commerce Secretary Howard Lutnick dismissed Buffett’s concerns, suggesting tariffs could replace the IRS
- Buffett has been selling stocks and building up Berkshire Hathaway’s cash reserves to a record $334.2 billion
Warren Buffett, the legendary investor and CEO of Berkshire Hathaway, has spoken out against President Donald Trump’s planned tariffs, calling them “an act of war” that will ultimately function as a tax on everyday goods. In a rare interview with CBS News, the 94-year-old “Oracle of Omaha” warned that American consumers—not foreign countries—will bear the cost of these trade policies.
The billionaire investor didn’t mince words about who would pay for the tariffs. “Over time, they are a tax on goods,” Buffett explained. “The tooth fairy doesn’t pay ’em!”
His comments come as Trump prepares to implement sweeping 25% tariffs on imports from Mexico and Canada. These new taxes will take effect on March 4.
China will face additional 10% tariffs on the same date. The Trump administration later raised the planned China tariff rate from 10% to 20%.
Buffett urged people to consider the long-term effects of tariff policies. “You always have to ask that question in economics,” he said. “You always say, ‘And then what?'”
This marks Buffett’s first public comment on Trump’s current trade policies. During Trump’s first term, Buffett had warned about negative global consequences from aggressive trade moves.
The tariffs are expected to increase costs for US consumers on many everyday products. These include electronics, vehicles, and other goods that rely on international supply chains.
China has announced plans to retaliate
China has already announced plans to retaliate with its own tariffs. This raises concerns about a trade war similar to what occurred during Trump’s first term.
Commerce Secretary Howard Lutnick dismissed Buffett’s concerns in a CNN interview. He called the billionaire’s comments about tariffs “silly.”
Lutnick suggested tariffs could replace the need for the Internal Revenue Service. He incorrectly stated the IRS was created when the US entered World War I.
In reality, what became the IRS was initially created in 1862 during the Civil War. The federal income tax was established in 1913, four years before US involvement in World War I.
While the US government once relied heavily on tariff revenue before the federal income tax, today’s economy is vastly different. Modern economic experts consider the idea of replacing income tax with tariffs financially unrealistic.
Buffett has maintained a defensive financial stance over the past year. Berkshire Hathaway has been selling stocks in major companies like Apple and Bank of America.
Buffett has built up a record cash reserve of $334.2 billion.
The conglomerate has built up a record cash reserve of $334.2 billion. This is up from $167.6 billion the previous year.
When asked about the current state of the economy, Buffett called it “the most interesting subject in the world.” However, he declined to comment further on economic conditions.
Buffett has previously spoken against tariffs. In 2016, he called Trump’s campaign trail tariff proposals “a very bad idea.”
Despite his concerns about specific policies, Buffett maintains his faith in the United States. “It’s the best place,” he said. “I was lucky to be born here.”
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