Warren Buffett, the chairman of Berkshire Hathaway. Picture: REUTERS
Warren Buffett, the chairman of Berkshire Hathaway. Picture: REUTERS

New York — Warren Buffett said on Monday a trade war between the US and China would be “bad for the whole world”.

Buffett spoke after US President Donald Trump tweeted on Sunday that he will raise tariffs on $200bn of Chinese imports to 25% from 10% beginning on Friday, and “shortly” slap a 25% tariff on $325bn of Chinese goods that have not been taxed.

Major stock markets fell worldwide on Monday in response to Trump’s tweet, which was a “rational” response, Buffett said on CNBC television.

His conglomerate Berkshire Hathaway owns or invests in many companies that do business in China, including Apple in which it has a more than $50bn stake.

“If we actually have a trade war it will be bad for the whole world,” Buffett said. “With some people in negotiations, the best technique is to act half-crazy.”

A full-scale trade war “would be bad for everything Berkshire owns”, Buffett added, though the probability it might happen is low.

Buffett said tough talk ahead of negotiations was understandable, but that it was 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.

“You’re talking about two personalities who are very much used to getting their way in politics, and talking about how they will be perceived in their own country in terms of their behaviour,” he said. “It gets very complicated.”

Buffett said the trade dispute has already had an effect on Berkshire’s BNSF railroad.

Last week, Jim Weber, the CEO of Berkshire’s Brooks Running unit, said his company was ending most of its shoe production in China and moving it to Vietnam because of tariff concerns.

Buffett nonetheless said the problems will not affect how Omaha, Nebraska-based Berkshire operates. “We will buy the same stocks today that we were buying last week,” he said.

Berkshire ended March with $191.8bn of equity investments. It also owns more than 90 companies including energy and utility firms, the Geico auto insurer and the Dairy Queen ice-cream chain.

Reuters