NEW YORK, May 6 — Warren Buffett said today that a trade war between the United States and China would be “bad for the whole world.”
Buffett spoke after US President Donald Trump tweeted yesterday that he will raise tariffs on US$200 billion of Chinese imports to 25 per cent from 10 per cent beginning on Friday, and “shortly” slap a 25-per cent tariff on US$325 billion of Chinese goods that have not been taxed.
Major stock markets fell worldwide today in response to the president’s tweet, which came ahead of scheduled trade talks this week, and was a “rational” response, Buffett said on CNBC television.
Buffett’s conglomerate Berkshire Hathaway Inc owns or invests in many companies that do business in China, including Apple Inc, in which it has a more than US$50-billion stake.
“If we actually have a trade war it will be bad for the whole world,” Buffett said.
A full-scale trade war is unlikely but “would be bad for everything Berkshire owns,” Buffett added.
He nonetheless said it would be “nonsense” for investors to sell stocks based on headlines, and that the US-China would not affect how Omaha, Nebraska-based Berkshire operates.
“We will buy the same stocks today that we were buying last week,” he said.
Trump today tweeted that the United States has for many years lost US$600 billion to US$800 billion annually on trade, and “with China we lose 500 Billion Dollars. Sorry, we’re not going to be doing that anymore!”
Buffett said tough talk ahead of trade negotiations was understandable, saying that for some people “the best technique is to act half-crazy,” but it would be ineffective to “shake your fist first and then shake your finger later on.”
He added that Trump’s threat raises the stakes for Chinese leader Xi Jinping.
“You’re talking about two personalities who are very much used to getting their way in politics, and talking about how they will be perceived in their own country in terms of their behaviour,” Buffett said. “It gets very complicated.”
Buffett said the trade dispute has already had an effect on Berkshire’s BNSF railroad.
Last week, Jim Weber, the chief executive officer of Berkshire’s Brooks Running unit, said in an interview that his company was ending most shoe production in China and moving it to Vietnam because of tariff concerns.
Buffett also said the United States should bolster its trade relations with Canada and Mexico.
“We’ve got lots and lots and lots of common interests,” he said. “Trade with Mexico and Canada is enormously important. We should treat them as neighbours, and not adversaries.”
Berkshire ended March with US$191.8 billion of equity investments. It also owns more than 90 companies including energy and utility companies, Geico auto insurance and Dairy Queen ice cream. — Reuters
Source: The Malay Mail Online