U.S. facing potential disaster due to trade tariffs, as per Buffett's warning
Berkshire Hathaway Annual Report: Record Cash Pile, Dropping Profits, and Buffett's Stance on Protectionism
In a recent turn of events, Berkshire Hathaway's annual meeting on May 3, 2025, revealed some major updates about the investment conglomerate. A whopping $1.2 trillion market capitalization was reached by the end of trading on May 2.
Setting a New Record with the Cash Pile
Berkshire Hathaway boosted its cash pile significantly, adding over $10 billion to a record high of $347.7 billion in the first quarter. The company refrained from increasing stock market positions, as Buffett successfully avoided significant losses due to Trump's tariffs, achieved through strategic sales in 2024, including those of Apple and Bank of America.
Quarterly Profit Dips and Insurance Adjustments
Despite the substantial cash reserves, the company's operating profit dropped by 14% in Q1, from $11.22 billion to $9.64 billion. Insurance underwriting operating profit plummeted by 49% year-over-year, landing at $1.34 billion, while insurance investment income saw a 11% increase, reaching $2.89 billion. BNSF railed profits grew by 6.2%, landing at $1.21 billion, and Berkshire Hathaway Energy saw a 53% surge, hitting $1.1 billion.
Berkshire's total net income faced a 64% decrease, dropping to $4.6 billion. The insurance float (loss reserve) remained steady at $173 billion. Berkshire was a net seller of shares for the tenth consecutive quarter, acquiring shares worth $3.18 billion and selling $4.68 billion worth.
Losses from stock market transactions amounted to $5.04 billion, contrasting with a profit of $1.48 billion in the previous year. However, the company notes that this indicator takes into account open positions where the actual profit or loss has not yet been realized, potentially misleading unfamiliar investors.
Protectionism and Its Consequences
At the meeting, Warren Buffett delivered a strong message against protectionism, remarking that it should not be employed as a political weapon. Tariffs were dubbed "an act of war" that could trigger devastating consequences. He asserted that free trade promotes economic growth, while protectionism can leave some countries behind.
- Trade should not be used as a weapon, tariffs are economic weapons... These can lead to market volatility and economic instability, said Buffett.
Buffett emphasized that while the U.S. has prospered from free trade, using it as a tool for political gain could be counterproductive. He pointed out that global prosperity benefits everyone, and isolating oneself can result in long-term consequences.
Warren Buffett, who has led the company for 60 years, is set to step down as CEO by the end of 2025. Greg Abel, the current executive director of energy, is set to take over the position following his departure.
Stock Market ReportOksana KuznetsovaJournalist
- In response to President Trump's tariffs, Berkshire Hathaway successfully avoided significant losses by strategically selling shares of companies like Apple and Bank of America in 2024, showing a skepticism towards protectionism as an economic strategy.
- During the annual meeting, Warren Buffett expressed his stance on protectionism, stating that it should not be used as a political weapon due to its potential to lead to market volatility and economic instability. He highlighted the benefits of free trade for economic growth.
- As Buffett prepares to step down as CEO by the end of 2025, the impacts of the protectionist policies he critiques will likely come to light in the realm of investing and business, particularly as they may influence general-news and the stock market.
