Berkshire Hathaway's Q1 Earnings Drop 14% Amid Buffett's Tariff Criticism

Warren Buffett, the 94-year-old CEO of Berkshire Hathaway, made headlines at the company's annual shareholder meeting in Omaha, Nebraska, on May 3. This event, often referred to as the "investment community's spring festival," saw Buffett openly criticize the U.S. government's tariff policies for the first time. In response to questions about President Trump's tariff measures, Buffett stated that the U.S. should not "use trade as a weapon." This marked his most direct criticism to date of the administration's tariff policies.

Buffett's comments came as Berkshire Hathaway reported a significant drop in operating profits for the first quarter of 2025. The company, which operates in various sectors including insurance, transportation, energy, and retail, warned that tariffs could further impact its earnings. The operating profit for the first quarter of 2025 fell by 14%, from $112.2 billion in the same period last year to $96.4 billion. This decline was primarily due to a 48.6% drop in underwriting profit in the insurance sector, as well as the impact of a weaker U.S. dollar on the company's international operations.

In the company's earnings report, Berkshire Hathaway highlighted the uncertainty caused by Trump's tariff policies and other geopolitical risks. Buffett echoed these concerns during the shareholder meeting, stating that the U.S. should not use tariffs to provoke global discontent. He described the current approach as a "major mistake," noting that alienating 7.5 billion people while boasting to 300 million is not a wise strategy. While Buffett acknowledged the importance of achieving a balanced international trade, he opposed Trump's method of imposing widespread tariffs to achieve this goal. He emphasized that global prosperity and security are best achieved through mutual cooperation and specialization.

In addition to his remarks on trade, Buffett announced his plan to retire at the end of the year, a decision that surprised many attendees. He recommended Greg Abel, the vice chairman of non-insurance operations, to succeed him as CEO. Abel, who has long been seen as Buffett's chosen successor, was expected to take over after Buffett's passing. However, Buffett's announcement indicated that he believes Abel is ready to lead the company immediately. Buffett also mentioned that only his two children, Howard and Susie, were aware of his retirement plans before the announcement.

Investors generally expressed confidence in Abel's ability to manage Berkshire Hathaway, although his performance in managing the company's cash investments remains to be seen. Buffett also clarified that he has no intention of selling any of his shares in the company, stating that he will eventually donate them. This announcement underscores Buffett's long-term commitment to the company and his philanthropic goals, ensuring a smooth transition of leadership while maintaining the company's values and strategic direction.