According to author and psychologist Robert Cialdini, appealing to authority is one of the top methods of persuasion. The idea is that people are more likely to believe something endorsed by someone they view as a trustworthy expert.
When it comes to financial matters, few Americans carry as much weight of authority as Warren Buffett. The 94-year-old is an investing legend and one of the wealthiest people in the world. His nickname, the Oracle of Omaha, hints at the level of respect given to Buffett.
It's not surprising, therefore, that some individuals choose to invoke Buffett's name in discussions of the hottest financial issue in the country right now: President Trump's tariffs. But what does Buffett really think about tariffs? It's not what you might have seen on social media.
Image source: The Motley Fool.
Social media's false quote
Unlike many publicly traded companies, Buffett's Berkshire Hathaway doesn't issue press releases very often. In 2024, the conglomerate had a total of 12 press releases, eight of which related to annual or quarterly updates.
However, a few days ago Berkshire issued an unusual press release. Its terse message stated: "There are reports currently circulating on social media (including Twitter, Facebook, and Tik Tok) regarding comments allegedly made by Warren E. Buffett. All such reports are false."
What false information linked to Buffett was being circulated on social media? President Trump recently posted a video on Truth Social, which ironically wasn't specifically mentioned in Berkshire's press release, that quoted Buffett as saying Trump "is making the best economic moves he's seen in 50 years."
This video was posted a few weeks ago on TikTok. Among other things, it claimed that Trump was "purposely crashing the stock market." Why would he do this? According to the video, the president's steep tariffs were intended to force the Federal Reserve to cut interest rates and entice companies to manufacture their products in the U.S.
What Buffett really thinks about tariffs
As Berkshire clarified in its press release, Buffett never made the statement attributed to him on social media. But what does the legendary investor really think about President Trump's tariffs? We don't have to resort to fabricating quotes; we can simply look at what Buffett has said publicly.
During Trump's first presidential term, he imposed more limited tariffs on imports from China and on aluminum and steel imports from Canada, the European Union, and Mexico. Buffett told CNBC in August 2018 that Berkshire's businesses were feeling the impact of higher prices caused by the tariffs. He added that tariffs would "aggravate" the inflation being experienced. Studies subsequently confirmed Buffett's view that the tariffs led to price increases on the affected products.
In May 2019, CNBC interviewed Buffett again and asked him about Trump's threats to escalate tariffs on China. He noted that the threats could be part of a negotiating strategy. However, Buffett warned, "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."
Has Buffett commented on tariffs during Trump's second term? Yes. Last month, CBS News aired an interview with Buffett focused on his friendship with longtime Washington Post publisher Katharine Graham. The subject of tariffs came up, though. Buffett called tariffs "an act of war."
When asked by CBS News' Norah O'Donnell how tariffs would affect inflation, he replied: "Over time, they are a tax on goods. I mean, the Tooth Fairy doesn't pay 'em!" Buffett added, "And then what? You always have to ask that question in economics. You always say, 'And then what?'"
What Buffett's tariff take could mean for the stock market
It's safe to conclude from Buffett's past remarks that he isn't a fan of tariffs. The multibillionaire knows from personal experience that tariffs can lead to higher prices. He's especially leery of tariffs that lead to full-blown trade wars. However, Buffett also understands that threatening tariffs can sometimes be useful in trade negotiations.
What could Buffett's take on tariffs mean for the stock market? If tariffs and threats of tariffs lead to more equitable trade policies that don't pass higher costs along to consumers and don't result in a trade war, the stock market could rebound. If not, stocks could flounder for longer than investors hope.
Either way, the sharp sell-off could create an opportunity for patient investors focused on the long term. That group includes Buffett himself.
