Major stock markets fall worldwide in response to Trump’s tweet. PHOTO: FILE
Buffett spoke after US President Donald Trump tweeted on Sunday that he will raise tariffs on $200 billion of Chinese imports to 25% from 10% beginning on Friday, and “shortly” slap a 25% tariff on $325 billion of Chinese goods that have not been taxed.
Major stock markets fell worldwide on Monday in response to the president’s tweet, which came ahead of scheduled trade talks this week, and was a “rational” response, Buffett said on CNBC television. Buffett’s conglomerate Berkshire Hathaway Inc owns or invests in many companies that do business in China, including Apple Inc, in which it has a more than $50-billion stake.
“If we actually have a trade war it will be bad for the whole world,” Buffett said.
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A full-scale trade war is unlikely but “would be bad for everything Berkshire owns,” Buffett added.
He nonetheless said it would be “nonsense” for investors to sell stocks based on headlines, and that the US-China would not affect how Omaha, Nebraska-based Berkshire operates. “We will buy the same stocks today that we were buying last week,” he said.
Trump on Monday tweeted that the United States has for many years lost $600 billion to $800 billion annually on trade, and “with China we lose $500 billion. Sorry, we’re not going to be doing that anymore!”
Buffett said tough talk ahead of trade negotiations was understandable, saying that for some people “the best technique is to act half-crazy,” but it would be ineffective to “shake your fist first and then shake your finger later on.”
He added that Trump’s threat raises the stakes for Chinese leader Xi Jinping.
Published in The Express Tribune, May 7th, 2019.
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