A billionaire will again occupy the Oval Office once Donald Trump is sworn in as president on Monday. Several billionaires will likely be there to watch the inauguration, including Amazon founder and Chairman Jeff Bezos, Tesla CEO Elon Musk, and Meta Platforms founder and CEO Mark Zuckerberg.
Another prominent billionaire won't attend Trump's big day -- Warren Buffett. And while many large companies (notably including Amazon, Tesla, and Meta) donated money to fund the inauguration, Buffett's Berkshire Hathaway hasn't been reported as being one of them.
But that doesn't mean Buffett wouldn't give helpful advice to the new presidential administration if asked. The legendary investor has already weighed in publicly on one of Trump's top proposed policies.
Image source: The Motley Fool.
"Tariff Man"
During his first presidential term, Trump imposed tariffs on some specific products such as aluminum, steel, and washing machines. He also targeted certain countries for more tariffs, especially China. However, tariffs could be much broader in Trump's second term.
Trump now thinks so highly of tariffs that he called himself "Tariff Man" during the presidential campaign. He even stated, "To me, the most beautiful word in the dictionary is tariff, and it's my favorite word."
On Nov. 25, 2024, Trump revealed the Executive Orders he intends to issue on his first day back in the White House. They included 10% additional tariffs on products imported from China and 25% tariffs on imports from Canada and Mexico. These three countries are by far the largest trading partners with the U.S.
Those tariffs could be only the start, though. Trump promised during the presidential campaign to impose tariffs of up to 20% on all products imported to the U.S. He singled out China for 60% tariffs and threatened to "tariff Denmark at a very high level" if it didn't agree to sell Greenland to the U.S.
Buffett's stark warnings
What does Buffett think about Trump's proposed tariffs? He hasn't said anything publicly so far. However, the "Oracle of Omaha" gave stark warnings about tariffs before and during Trump's first term.
Buffett told Fox Business in a 2016 interview that steep tariffs that were reciprocated could "cut down on trade dramatically" between countries. He also said this scenario would have "a significant negative effect" on the economy.
In a 2019 interview with CNBC, Buffett acknowledged that threatening tariffs can sometimes be an effective negotiating tactic, stating, "There are times in negotiations when you talk tough." However, he warned against implementing tariffs that lead to a trade war. Buffett said, "If we actually have a trade war, it would be bad for the whole world, and could be very bad, depending on the extent of the war."
Many economists agree with Buffett's view on tariffs. The Tax Foundation, a nonpartisan nonprofit organization focused on tax policy, reviewed analyses of Trump's proposed tariffs conducted by economists with 12 different organizations, including Fitch, Moody's, and the Peterson Institute for International Economics. All of them projected a negative impact on U.S. GDP.
Will Trump heed Buffett's warning?
Some on Wall Street seem to think Trump might heed Buffett's past warning about tariffs. For example, UBS was one of the organizations in the Tax Foundation's analysis that thought Trump's tariffs would hurt the U.S. economy. However, UBS' 2025 forecast focused on "a positive market narrative" with deregulation and tax cuts fueling a sustained "roaring 20s."
That doesn't mean Wall Street is 100% confident that Trump won't move full steam ahead with his wide array of proposed tariffs, though. UBS chief investment officer Mark Haefele acknowledged the possibility, stating there's a risk that "trade tariffs, excessive fiscal deficits, and geopolitical strife will contribute to higher inflation, weaker growth, and market volatility."
We'll soon learn how serious Trump is about tariffs. And we might find out if Buffett's stark warning about the economic dangers of steep tariffs that lead to a trade war was on target or not.
