President Trump has taken the trade rhetoric to the next level. He announced an increase in tariffs on $200 billion worth of Chinese goods to 25%. President Trump has also threatened to impose a 25% tariff on the remaining $325 billion worth of Chinese goods. The announcement came days before the eighth round of trade talks between the US and China. President Trump and President Xi Jinping agreed on a truce last year.
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Buffett said, “If we actually have a trade war it will be bad for the whole world,” He said. “With some people in negotiations, the best technique is to act half-crazy.” Buffett also said, a full-scale trade war “would be bad for everything Berkshire owns.” Reuters reported that Buffett sees low chances of a full-blown trade war. Previously, Buffett expressed optimism about US-China trade relations. However, Alibaba’s co-founder (BABA) Jack Ma said that the trade war could last decades.
2018 annual letter
Buffett has taken a dig at President Trump in the past. In his 2018 annual shareholder letter, Buffett said, “Americans will be both more prosperous and safer if all nations thrive.” The comment was seen in the context of President Trump’s trade rhetoric against China. Buffett also said, “It is beyond arrogance for American businesses or individuals to boast that they have done it alone.” Berkshire Hathaway’s price action has lagged the S&P 500 (SPY) this year. Read Don’t Just Blame Berkshire’s Size for Its Underperformance to learn more.