Warren Buffett Calls Tariffs ‘An Act Of War,’ Warns They Function As A Tax On Goods Amid Market Turmoil

Legendary investor Warren Buffett characterized tariffs as “an act of war” that functions as a consumer tax, as markets grapple with President Donald Trump‘s recent implementation of 25% tariffs on Canadian and Mexican imports.

What Happened: “Tariffs are actually, we’ve had a lot of experience with them. They’re an act of war, to some degree,” Buffett said in an interview with CBS News that aired on Sunday.

When asked about tariffs’ impact on inflation, the 94-year-old Berkshire Hathaway chairman was blunt: “Over time, they are a tax on goods. I mean, the Tooth Fairy doesn’t pay ’em!” He added economists should always ask, “And then what?”

Markets have already been rocked by Trump’s tariffs. Since December, there has been a $1 trillion sell-off in cryptocurrencies, with Bitcoin (CRYPTO: BTC) dropping below $80,000, a 28% decline from its record high in January before rising to $92,217.

The Nasdaq-100, which is monitored by Invesco QQQ Trust (NASDAQ:QQQ), has fallen 3.16% to 20,884 since Trump’s inauguration, while the S&P 500, which is tracked by SPDR S&P 500 ETF (NYSE:SPY), has fallen 1.57% to 5,954.

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Why It Matters: Goldman Sachs Group Inc. (NYSE:GS) has warned that tariffs could reduce corporate earnings by 1-2% for every 5% tariff increase. The investment bank predicts a potential 5% S&P 500 decline in the near term as companies either absorb higher costs or pass them to consumers.

Despite market turbulence, Buffett remains bullish on American companies. “A majority of any money I manage will always be in the United States,” he said. When asked why, he replied simply, “It’s the best place!”

Both Canada and Mexico have threatened retaliatory measures. Canadian Foreign Affairs Minister Mélanie Joly announced plans for retaliatory tariffs on up to $155 billion worth of American goods, while Mexican President Claudia Sheinbaum confirmed her “Plan B” of counter-tariffs remains ready.

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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.