Warren Buffett Advocates Free Trade Amid U.S. Economic Challenges

Warren Buffett, the legendary investor and CEO of Berkshire Hathaway, used the company's annual meeting to advocate for free trade, asserting that tariffs should not be employed as a tool for economic leverage. He argued that a balanced and inclusive global trade system would ultimately benefit the United States, as the prosperity of other nations would lead to greater prosperity for the U.S. This stance comes at a time when the U.S. economy is grappling with significant challenges, including the impact of tariff policies that have led to market volatility and concerns about an economic slowdown.

Buffett's remarks reflect his long-standing belief in the benefits of free trade. He emphasized that the U.S. should not aim to dominate global trade at the expense of other countries. Instead, he advocated for a more collaborative approach, stating that the prosperity of other nations would ultimately benefit the U.S. economy. This perspective is in line with Buffett's broader philosophy of long-term investment and economic growth.

Berkshire Hathaway, under Buffett's leadership, has maintained a cautious approach to investing. The company reported holding $334.2 billion in cash at the end of the first quarter, a record high. This cash reserve comes as the company faces significant insurance losses from the January wildfires in Southern California, which reduced its operating profit by 14% to $9.64 billion. The company's insurance businesses, including Geico, have performed strongly in 2024, but Buffett expects this trend to reverse in 2025 due to declining prices and increasing risks.

The company's net income for the quarter fell by 64% to $4.6 billion, reflecting unrealized losses on investments in companies like Apple. Berkshire has not repurchased any of its own stock for the third consecutive quarter and has been a net seller of stocks for the tenth consecutive quarter. Buffett downplayed concerns about the company's large cash holdings, noting that while the company has recently spent close to $10 billion, investment opportunities do not arise in an orderly fashion. He expects significant investments to occur within the next five years but not necessarily immediately.

Buffett also addressed the company's investments in five Japanese trading companies: Itochu, Marubeni, Mitsubishi, Mitsui, and Sumitomo. He and Greg Abel, Berkshire's vice chairman and designated successor, expressed strong support for these investments, stating that they are likely to remain in place for at least 50 years. "We are building relationships," Abel said. "We really want to do big things together."

Ajit Jain, Berkshire's vice chairman in charge of insurance operations, highlighted the technological advancements made by Geico in measuring driver behavior and adjusting premiums accordingly. This progress has allowed Geico to better manage risks and offer more competitive pricing to its customers. Despite the challenges facing the U.S. economy, Berkshire Hathaway's stock has performed well, rising 18.9% year-to-date, while the S&P 500 index has fallen by 3.3%. The company's diverse portfolio of businesses, including BNSF Railway, Geico Insurance, energy operations, real estate brokerage HomeServices, and Fruit of the Loom, provides a broad reflection of the U.S. economy.

The company's annual meeting, held in Omaha, attracted thousands of shareholders who braved the cold weather to hear Buffett's insights and ask questions. Buffett, now 94 years old, showed no signs of slowing down, delivering his remarks with energy and clarity. His long-term optimism about the U.S. economy and the role of trade in driving global growth remains unwavering, despite the current challenges. Buffett's defense of free trade and his cautious approach to investing reflect his commitment to long-term economic growth and stability.