Buffett’s Rare Outcry: Trade Wars Have No Winners, Deficit Threatens America

No question that trade trade can be an act of war. At the 2025 Berkshire Hathaway annual shareholders meeting, Warren Buffett rarely criticized tariffs as attacks on consumers and warned of an unsustainable US deficit, advocating open trade to avoid trade wars. He remains optimistic about America's future while passing the CEO role to Greg Ael. Stay tuned for Buffett's outlook on the future of the global economy. On May 3rd at the 2025 Berkshire Hathaway annual shareholders meeting, Warren Buffett made a rare direct criticism of the US government's tariff policies, sparking widespread public attention. No question that trade trade can be an act of war and uh and I think it's led to bad things just the attitudes it's brought out. Buffett stated in the United States we should be looking to trade with the rest of the world and we should do what we do best and they should do what they do best. That's what we did originally. We were good at producing tobacco and cotton 250 years ago and we traded it. We want a prosperous world, but eight countries with nuclear weapons, including a few that I would call quite unstable, I do not think it's a great idea where a few countries say, "Haha, we won." And other countries are envious. Buffett believes that tariffs are essentially a commodity tax with the final cost ultimately passed on to American consumers, potentially leading to inflation and harming consumer interests. Berkshire Hathaway's 2025 first quarter financial report shows a 14% year-over-year decline in operating profit, dropping from 1122 billion to 964 billion with insurance underwriting profits plummeting by 48.6%. Buffett warned that tariff policies could further squeeze the company's profits, particularly in its insurance, transportation, energy, and retail sectors. Buffett has historically avoided publicly discussing politics or directly criticizing government policies, making this statement widely regarded by mainstream media as his most direct criticism to date of the Trump administration's tariff policies. As a staunch supporter of globalization, Buffett believes the US should engage in open trade with other nations. each leveraging their comparative advantages. He stated that a more prosperous global economy would not come at the expense of US interests, but would instead make the US safer and wealthier. At this year's Berkshire Hathaway annual shareholders meeting, Buffett also remarked that the US debt level is unsustainable. I think the issue of controlling government revenue and expenditure is a problem that has never been thoroughly resolved, and I don't think we're immune to it either. He added, "We're operating at a fiscal deficit now that is unsustainable over a very long period of time. It has the aspect to it that gets uncontrollable at a certain point. Former Federal Reserve Chair Paul Vulkar kept that from happening. We've come close multiple times." When asked about Doge, led by Elon Musk, Buffett did not delve into the politics of the initiative. However, he noted that cutting the deficit would be a difficult but necessary task. I think that bureaucracy is dangerously contagious and it really doesn't have any checks on it. He said, I wouldn't want the job of trying to correct what's going on in revenue and expenditures of the United States with roughly a 7% gap when probably a 3% gap is sustainable. In fact, Buffett has long been concerned about and issued warnings regarding the trade deficit between the US and other countries. It was in 2003, Joe, I wrote a article for Fortune actually about the trade deficit. I was worried about it getting too large then because again it was getting to be 3% or so of GDP and it wasn't specific to China at all but it was just a question of how wise it is to let the trade deficit grow larger and larger. He continued when you're buying more from other countries than they're buying from you. You're handing them investment funds. You give them little pieces of paper and they can convert that into buying things like government bonds or buildings here. For example, the Japanese bought Pebble Beach in the 1980s when they were running a big surplus. So, you're giving up claim checks on our country in exchange for having more consumption now than you're producing in this country. And and we don't want it to be a question of where we where we import 20% of our GP GDP and we export nothing. Now, we could all quit working and we could hand little pieces of paper to the rest of the world. They could keep sending us food. They could send us autos and they send us all kinds of things. But eventually eventually they have claims on all our wealth. Buffett emphasized that the US government needs to implement policies to ensure the overall trade deficit relative to GDP does not spiral out of control. A call he has been making for a long time. Despite his concerns over tariff policies and fiscal deficits, Buffett remains optimistic about the long-term prospects of the US economy. At the annual shareholders meeting, he stated, "The long-term trend is up. As of the first quarter of this year, Berkshire Hathaway held a record $347.7 billion in cash reserves, reflecting Buffett's cautious approach amid short-term uncertainty. However, he clarified that this is not a pessimistic view of the US economic outlook, but rather a strategy of waiting for highquality investment opportunities. He expects significant investment opportunities to arise within the next 5 years, reflecting his confidence in the long-term growth of the US market. Buffett also stated, "Never bet against America. US exceptionalism is still there. We've gone through great recessions. We've gone through world wars. We've gone through the development of an atomic bomb that we never dreamt of at the time I was born. So, I would not get discouraged about the fact that it doesn't look like we've solved every problem that's come along. We'll always find all kinds of things to criticize in the country, but the luckiest day in my life is the day I was born because I was born in the United States. There are 8 billion people in the world and just 300 million here. If you're already in the US, you've already won the game. Make the most of it. According to the US Bureau of Labor Statistics employment situation report released last Friday, US employers added 177,000 jobs in April. The report reflects 52 consecutive months of job growth, once again underscoring the robust growth in labor demand in the US economy. Total employment reached a record 159.5 million, an increase of 7.2 2 million from the pre-COVID peak. The Bureau of Labor Statistics job openings and labor turnover survey also showed that employers had 7.19 million job openings in March, down from 748 million in February. During this period, there were 7.08 million unemployed individuals, meaning there were 1.01 job openings per unemployed person on average, a clear sign of excess labor demand. Buffett is not only optimistic about the long-term prospects of the US economy, but also demonstrates an open attitude toward global economic opportunities with his over 20 billion investment in the Japanese market. He stated that he has no plans to sell Japanese stocks in the next decade. At this year's shareholders meeting, Buffett also made a surprising announcement. He will recommend to the board that Vice Chairman Greg Ael take over as CEO by the end of the year. This decision was made after careful consideration and had only been discussed privately with his two sons who serve on the company's board. Other board members, including Abel himself, were unaware of the plan. Buffett believes the time is ripe for Abel to become CEO. Greg Ael, 62, is Canadian and has served as vice chairman of Berkshire Hathaway's non-insurance businesses since 2018, overseeing core operations such as energy, railroads, and retail. He joined Bergkshire's energy business in 1992 and steadily rose to become a key executive. Abel is renowned for his exceptional operational skills and strategic vision, successfully managing Berkshire's diverse non- insurance business segments and earning Buffett's deep trust. For years, Abel has been Buffett's designated successor, though it was widely expected that he would take over after Buffett's passing. This announcement of an earlier transition signals Buffett's full confidence in Abel. Warren Buffett was born on August 30th, 1930 in Omaha, Nebraska, and displayed a knack for business from a young age. His interest in the stock market and investing dates back to his school years, nurtured by his father, who encouraged young Warren's curiosity about business and investing. At age 10, his father took him to visit the New York Stock Exchange. By age 11, Buffett had begun buying stocks. And at 14, he used $1,200 of his savings to purchase a 40 acre farm operated by a tenant farmer. By the time he graduated from college, Buffett had amassed $9,800 in savings. Later at Columbia University, he studied under value investing pioneer Benjamin Graham and earned a master's degree in economics in 1951, laying the foundation for his value investing philosophy. In 1954, Buffett began working at Graham's partnership with a starting salary of $12,000 per year. His mentor Graham emphasized that stock selection should offer a significant margin of safety after weighing price against intrinsic value. In 1956, Graham retired and closed his partnership. By then, Buffett had accumulated over $174,000 in personal savings. He returned to his hometown of Omaha and founded Buffett Partnership Linted, achieving substantial returns by investing in undervalued stocks. By 1962, his investments had delivered an annualized return of 29.5%. In 1965, Buffett acquired the struggling textile company Berkshire Hathaway and transformed it into an investment holding company with operations spanning insurance, railroads, energy, retail, and more. Buffett adheres to a buy good companies and hold them long-term value investing philosophy, focusing on a company's intrinsic value and long-term profitability. His notable investment cases include American Express, first invested in the 1960s with multiple increases in holdings. Coca-Cola, invested in 1988, still held today, yielding returns of dozens of times the initial investment. Apple began investing in 2016 with a 2025 holding value exceeding $150 billion. Japan's five major trading companies invested over 20 billion in 2020 with a commitment to long-term holding. Additionally, Berkshire has amplified its investment returns by acquiring insurers like Gico and using relatively lowcost insurance funds for investments. Since acquiring Berkshire Hathaway in 1965, Buffett has transformed it from a small textile business into a diversified conglomerate with a market value exceeding $1 trillion, achieving a cumulative investment return of over 5.5 million times over 60 years with a compound annual growth rate of 19.9%. Buffett is also a co-founder of the Giving Pledge, committing to donate over 99% of his wealth. He has already donated company stock worth tens of billions of dollars to various charitable organizations. This announcement of Buffett's retirement marks the end of an era for this legendary figure in the investment world as Berkshire prepares to enter a new chapter. Do you agree with Buffett's analysis and observations on the US economy? Are you optimistic about the long-term prospects of the US economy? Feel free to leave a comment and share your unique opinions and suggestions. Thanks for you watching. We'll see you next time.