Legendary investor Warren Buffett is cautioning against the impact of tariffs as President Donald Trump prepares to impose new trade restrictions on America’s biggest trading partners.
In an interview with CBS News that aired Sunday, the Berkshire Hathaway CEO called tariffs “an act of war, to some degree,” warning they function as a tax on goods that ultimately raises prices for consumers.
“The Tooth Fairy doesn’t pay ‘em!” Buffett joked, underscoring the reality that businesses and consumers will bear the cost of heightened trade barriers.
Trump is set to impose a 25% tariff on goods from Canada and Mexico starting Tuesday, while also raising tariffs on Chinese imports from 10% to 20%. His administration has oscillated on tariff policies, drawing criticism from economists who warn of inflationary pressures and rising costs for everyday goods. Meanwhile, China has responded with retaliatory measures, fueling concerns of a deepening trade war.
Commerce Secretary Howard Lutnick dismissed Buffett’s concerns, arguing in a CNN interview that tariffs could replace the Internal Revenue Service—an assertion riddled with historical inaccuracies. The IRS was established in 1862, and federal income tax became a primary revenue source in 1913, years before the U.S. entered World War I.
Buffett has long been critical of tariffs, calling Trump’s past proposals “a very bad idea.” In his CBS interview, he declined to comment on the broader economy but emphasized the importance of questioning the long-term effects of such policies.
“You always have to ask that question in economics: Always say, ‘And then what?’” Buffett said.
Despite his concerns about tariffs, Buffett reaffirmed his faith in the U.S. economy, as Berkshire Hathaway continues to maintain a record cash reserve while scaling back investments in blue-chip stocks.
“It’s the best place,” he said. “I was lucky to be born here.”
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