Warren Buffett raised concerns about tariffs and protectionist trade policies during Berkshire Hathaway’s annual shareholder meeting on May 3, 2025.

He said, “Trade should not be a weapon,” emphasizing the potential negative outcomes of such policies.

The 94-year-old investor commented that global prosperity is beneficial for all countries, including the United States.

He noted, “The more prosperous the rest of the world becomes, it won’t be at our expense; the more prosperous we’ll become.”

Buffett cautioned that protectionist measures could jeopardize the US’s long-term status as a leading industrial nation.

🔗 Source: CNBC

🧠 Food for thought

1️⃣ Historical echoes: Protectionism’s troubled economic legacy

Buffett’s warning against using trade as a “weapon” reflects historical lessons from America’s experience with high tariffs.

The Smoot-Hawley Tariff Act of 1930 raised import duties to their highest levels in U.S. history, triggering retaliation from trading partners and contributing to a 66% contraction in world trade between 1929 and 19341.

This protectionist policy exacerbated the Great Depression, with U.S. imports from Europe plummeting from $1.3 billion in 1929 to just $390 million by 1932 as trading partners imposed their own retaliatory tariffs1.

After witnessing protectionism’s harmful results, the U.S. shifted toward trade liberalization through the Reciprocal Trade Agreements Act of 1934, beginning decades of economic growth through more open markets2.

2️⃣ The hidden costs of tariffs on American consumers and businesses

While tariffs are often presented as protecting American industries, recent economic research highlights their substantial costs to consumers and businesses.

New York Federal Reserve research shows that 2018 tariffs directly increased the Consumer Price Index by 0.3%, with targeted industries seeing even larger price jumps as domestic producers raised prices once shielded from foreign competition3.

The analysis found that a 10 percentage point increase in tariffs on production inputs raises producer prices by 2.3%, as manufacturers must pass along higher costs of materials and components to consumers3.