From CNN March 3, 2025
Warren Buffett, the 94-year-old investment icon and longtime economic sage, isn't one to wade into political debates. But the so-called 'Oracle of Omaha' made some critical comments in a recent interview In a rare public rebuke, Buffett criticized President Donald Trump's sweeping tariff plan.
'Tariffs are, we've had a lot of experience with them,' he said in an interview on CBS New. 'They’re an act of war, to some degree.
'Over time, they are a tax on goods. I mean, the tooth fairy doesn’t pay 'em!'
Buffett's comments come as Trump barrels toward a negotiated deadline for imposing 25 percent tariffs on all Canadian and Mexican imports — a move that will likely spark a trade war.
The President originally planned to launch the tariffs in early February but struck a last-minute deal to delay them by a month. Instead, he hit Chinese imports with a 10 percent tariff. Implemented today March 4th and the stock markets have reacted accordingly.
Another 10 percent tariffs will launch on Chinese goods.
Countries have vowed to retaliate, likely with their own slate of tariffs that will make American goods less competitive in global trades.
Warren Buffett, the 94-year-old billionaire, said tariffs are like an 'act of war'
The Trump camp argues that tariffs will boost government revenue, lower taxes, and spur domestic manufacturing.
But most economists and investors - including Buffett - warn they're more likely to drive up consumer prices and strain international trade relationships.
Before striking a last-second deal with the leaders of Canada and Mexico, global stock markets started to tumble. Immediately after the tariffs were called off, the US stock market leveled off. Markets reacted similarly on Monday after President Trump confirmed that he was imposing tariffs on the neighboring countries.
'No room left for Mexico or for Canada,' he said when asked about the negotiations to hold off the 25 percent tax. 'The tariffs, you know, they're all set. They go into effect tomorrow.'
The S&P 500 fell 1.8 percent, marking its worst day since December, the Dow Jones Industrial Index lost 1.5 percent and the tech-heavy Nasdaq was down 2.6 percent at market close.
Meanwhile, market followers have noticed a trend in Buffett's portfolio in the past few years The stock market reacted negatively to Trump's tariff plans in February and March The Nasdaq lost 2.6 percent of its value after Trump re-upped his tariff commitment on Mexico and Canada The billionaire investor has dumped several stocks and piled up on cash, sparking interest in Buffett's prediction about market futures.
He offloaded shares of pharmaceutical giant DaVita. Berkshire Hathaway also invested in five Japanese producers. The moves decreased the billionaire's holdings in other companies while increasing his cash. There have been two main reads of this move: either the 94-year-old is wary of the market and is pulling his cash to preserve its growth, or, he is preparing for the end of his illustrious career by handing over gobs of investment potential for his successors.
Either way, he remained coy when asked about his stake in the market and views on the economy's long-term projections.
'Well, I think that’s the most interesting subject in the world, but I won’t talk, I can’t talk about it, though,' he told CBS News. 'I really can’t.'
In an interview on The Situation Room on Monday with CNN’s Pamela Brown, Commerce Secretary Howard Lutnick dismissed Buffett’s comments about tariffs as “silly.”
Lutnick said tariffs could replace the need for the Internal Revenue Service, which he incorrectly said was created when the US entered World War I.
“The United States of America before 1913 only had tariffs, and then we created — when we entered World War I, we all had to pitch in, and we created, of course, the brilliantly named Internal Revenue Service,” Lutnick said.
What became known as the IRS was initially created in 1862, during the Civil War. The federal income tax, collected by the IRS, was established in 1913 by the ratification of 16th amendment, four years before the US entered World War I. Since then, federal income tax has become the government’s largest source of revenue.
It is true the US government used to rely on revenue from tariffs before the federal income tax was created, but the US economy of the 2020s — a global powerhouse deeply intertwined in international trade — has evolved tremendously in scope and complexity since the US economy of the late 1800s and early 1900s.
In short, the proposal to abolish the IRS and supplement government revenue with tariffs is financially unrealistic and problematic.
While Buffett didn’t elaborate on his comment about tariffs being an act of war, tariffs have long been associated with protectionist trade policy that has influenced isolationist foreign policy. In the 1930s, after the United States hiked tariffs as part of the Smoot-Hawley Tariff Act of 1930 (which exacerbated the Great Depression), the French media reportedly called it a declaration of (economic) war.
Buffett has previously been outspoken about the negative effects of tariffs. In 2016, he said Trump’s proposals for tariffs on the campaign trail were “a very bad idea.”
When Buffett was asked by O’Donnell about his thoughts on the general state of the economy, he said it was the “most interesting subject in the world,” though declined further comment.
Buffett, whose every word is watched closely by investors, drew attention over the past year due to a growing cash pile at Berkshire Hathaway.
Berkshire amassed its cash and cash equivalents to a record $334.2 billion in the fourth quarter, up from $167.6 billion the year prior. Berkshire added to its cash position while selling stock in blue-chip companies like Apple (AAPL) and Bank of America (BAC), raising questions about his thoughts on the US market.
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