(2003)
Discussion a few days ago: https://news.ycombinator.com/item?id=43579908
In a more recent interview in March 2025:
> Asked about how tariffs will affect the economy, Buffett stated, "Tariffs are actually, we've had a lot of experience with them. They're an act of war, to some degree."
> I asked, "How do you think tariffs will impact inflation?"
> "Over time, they are a tax on goods. I mean, the Tooth Fairy doesn't pay 'em!" he laughed. "And then what? You always have to ask that question in economics. You always say, 'And then what?'"
* https://www.cbsnews.com/news/warren-buffett-on-legendary-was...
Would you argue that the period between 2003 and 2025 have strengthened or weakened the case for free trade?
In the US this has happened:
https://fred.stlouisfed.org/series/MEPAINUSA646N
https://fred.stlouisfed.org/series/DSPIC96
Meanwhile across the entire world this has happened:
https://ourworldindata.org/history-of-poverty-data-appendix
You can argue the growth of globalization & lowering of trade barriers were unrelated to this up-and-to-the-right, but it’s hard to argue they’re making things worse unless you really scope down to particular losers in a world of mostly winners.
1. Wealth inequality. Wealth inequality has exploded over the past few decades, and even if the median has gone up, the effects of widening wealth inequality can be very bad for society. First, as Charlie Munger once said, "The world is not driven by greed, but envy." Even if you're doing a little bit better, if everyone else is doing a ton better, this leads to you feeling like you're doing a lot worse. The rise of authoritarian politics in the West I think can be directly attributed by large swaths of society feeling left behind and like they are "getting screwed".
2. Related to the above, but finite resources, most especially land, are always vacuumed up by the wealthiest in society, regardless of any other level of incomes. So when there is a lot of wealth inequality, it can become prohibitively expensive to own land in any remotely desirable area, and this has huge negative societal effects (happy to go into this point more if you disagree).
3. The flip side of "optimized global supply chains" is incredibly brittle supply chains in the face of black swan events. Covid was a taste of this, though I think the global supply chain actually help up remarkably well for how enormous an impact Covid had. I think a better example would be something like chip production in Taiwan, which if it disappeared tomorrow would be absolutely devastating for the world economy.
4. Some countries that are now leaders in the world economy, like South Korea, had an extremely protectionist stance for decades in order to allow crucial industries to develop and not be undercut by cheap imports. I certainly don't think it's the only reason, but one reason Africa struggles so much is because they are flooded with cheap goods (or free goods in the guise of "charity") that prevent native industries from developing.
https://www.macrotrends.net/global-metrics/countries/USA/uni...
So something reversed the trend Buffett was seeing in 2003.
For the US specifically, various considerations:
* https://twitter.com/ArmandDoma/status/1908189982789095677#m
* https://www.csis.org/analysis/do-not-blame-trade-decline-man...
* https://archive.is/https://www.wsj.com/opinion/free-trade-di...
But in 2025, tariffs are closing the barn door after the horse ran out, went to horse college, settled down, had some foals, and saw them grow up and move into their own doorless barns. But that's populism for you, always responding to the previous crisis with an approach that will enrich its sponsors and then cause the next crisis.
[0] The Republican party's fake "fiscal responsibility" where most of that money was just handed to banks instead, driving up the asset bubbles. I'm saying this as a general libertarian from a conservative Austrian economics view, not as a Democratic partisan booster. But blame where blame is due.
For the vast majority of people, I’d pick the 70 year-old version even if they did live to 90. With Buffet, I’m not so sure.
How expensive does a tariff have to be before it is a de facto blockade?
I think that comparison is much more apt than it first appears.
(Having said that, it's not such a ridiculous concept as it seemed.)
“Donald Trump is the first president in my lifetime who does not try to unite the American people—does not even pretend to try. Instead, he tries to divide us,” Mattis writes. “We are witnessing the consequences of three years of this deliberate effort... I swore an oath to support and defend the Constitution. Never did I dream that troops taking that same oath would be ordered under any circumstance to violate the Constitutional rights of their fellow citizens—much less to provide a bizarre photo op for the elected commander-in-chief, with military leadership standing alongside.
If you are ideologically in the group that he used the military against on American soil, or you are in the half of the divided country that he doesn't see as his supporters, then the concept is even less ridiculous sounding, cogent even. He's effectively taken a government that represents a whole country and turned it into a government that only represents half of the country. When you realize that all he supports are American oligarchs who are international in nature the comparison starts to get more and more and more cogent.
These are two of the complaints of America's founding fathers against King George III written in the declaration of independence.
"For cutting off our Trade with all parts of the world:"
"For imposing Taxes on us without our Consent:"
As far a "acts of war" against their own citizens: Israel is Gaza's government and that blockade is so strong it is called an open air prison. Russia is fighting to be Ukraine's government. China is Hong Kong, Tibet, and Xinjiang's government.
In an authoritarian's government, it is not your government, it is only their government. Authoritarianism is in many ways a state of persistent war against people, which intuitively makes sense, because war is how you resolve disputes when negotiation doesn't work. War is the state of power alone resolving disputes, which is also what authoritarianism is.
blockade, embargo, sanction, tariff. Each are different and have different meaning.
If you were America's founding fathers and King George 3, the leader of their government, decided to put a 10000% tariff on goods meant for the colonies, do you think they would have felt blockaded?
To pile on this point, tariffs are a tax and a subsidy:
> Executives from U.S. steel companies were enthusiastic backers of the 2018 tariffs and have urged Trump to deploy them again in his second term. They have called for the elimination of tariff exemptions and duty-free import quotas, saying those carve-outs allow unfairly low-price steel to enter the U.S. and undermine the steel market.
[…]
> Higher prices for imported steel are often followed by domestic suppliers raising their own prices, which then get passed through supply chains, manufacturing executives said. For consumers already reeling from rising retail prices and inflation, pricier steel and aluminum could further lift costs for durable goods like appliances and automobiles, as well as consumer products with aluminum packaging, such as canned beverages.
> “The issue with tariffs is everybody raises their prices, even the domestics,” said Ralph Hardt, owner of Belleville International, a Pennsylvania-based manufacturer of valves and components used in the energy and defense industries. Steel and aluminum are Belleville’s largest expenses.
* https://archive.is/https://www.wsj.com/economy/trade/trump-t...
So tariffs are (regressive) taxes in the sense that consumers are paying higher prices (with the money going to the government). But they are subsidies in that domestic companies don't have as much pressure on prices and can get more money.
So if you want to help a particular industry might as well just go with subsidies directly instead of the taxation add-on as well.
> The time to halt this trading of assets for consumables is now, and I have a plan to suggest for getting it done. My remedy may sound gimmicky, and in truth it is a tariff called by another name. But this is a tariff that retains most free-market virtues, neither protecting specific industries nor punishing specific countries nor encouraging trade wars. This plan would increase our exports and might well lead to increased overall world trade. And it would balance our books without there being a significant decline in the value of the dollar, which I believe is otherwise almost certain to occur.
> We would achieve this balance by issuing what I will call Import Certificates (ICs) to all U.S. exporters in an amount equal to the dollar value of their exports. Each exporter would, in turn, sell the ICs to parties—either exporters abroad or importers here—wanting to get goods into the U.S. To import $1 million of goods, for example, an importer would need ICs that were the byproduct of $1 million of exports. The inevitable result: trade balance.
I think that there could be some downsides to this because the US exports a lot of agricultural goods which are already subsidized as it is.
Also due to the reserve nature of the USD the dollar and international trade mostly done in USD there is a huge demand for dollars keeping it strong compared to other currencies. This fundamentally is at odd with an export driven economy.
What if the Dollar weren't the world's reserve currency, either due to deliberate policy by the U.S., or the inevitable fact that the U.S. economy will shrink as a share of the world's economy as India and China develop?
Having different currencies for internal vs external trade isn’t usually something I associate with prosperous countries.
The issue may be that sovereignty is hard to measure, but I think we have been complaining about the long-tail effects for a while:
- wealth inequality (as businesses become optimized on foreign labor, execs are paid more and workers less)
- job security (volatility for investor class means sudden job cuts or offshoring)
- asset inflation in real estate (no one can afford a freakin house)
- WAR (we have an obligation to defend our debt owners in the Middle East)
Every time the public trust gets violated, we lose a small piece of our future.
An intelligent or competent leader who had the power currently enjoyed by the President would be able to implement the system suggested by Buffet, and it would likely see less opposition than the current tariffs have.
The filibuster rule requires bipartisan agreement to implement any proposed policy, and neither party wants to give an administration from the other party any kind of win.
Perversely, the better the idea, the less likely it is to pass Congress.
Better idea -> it will be successful -> it will be popular -> the administration will benefit politically -> the other party will oppose it -> it won't get 60 votes in the Senate -> it won't become law
On the other hand this is a bargaining tactic. I do not think these tariffs will last.
> Instead, recall that President Trump views tariffs as generating negotiating leverage for making deals. It is easier to imagine that after a series of punitive tariffs, trading partners like Europe and China become more receptive to some manner of currency accord in exchange for a reduction of tariffs
https://www.hudsonbaycapital.com/documents/FG/hudsonbay/rese...
And look who wrote it
"Be fearful when others are greedy and greedy when others are fearful".
I don't know if he's specifically said this but I think a more accurate picture of his view is "unless you're an idiot savant like me whose skill for this would be useless at any other point in history, don't try to time the markets".
See the Superinvestors of Graham Doddville: https://en.m.wikipedia.org/wiki/The_Superinvestors_of_Graham...
His principal is simple: Buy priced fairly or underpriced businesses. Sell overpriced businesses.
The not simple part: Using 80 years of business experience to assess strengths and risks to an enterprise, and not FOMOing into something. He would say, he doesn't buy stocks, he buys businesses. How many people buying stocks have even opened a 10K?
One of the few shining examples of investor vs trader mindset.
that is almost Buffets "USA net ownership balance in 1980" - 360 billion. from that 2003 document... ;)
Can someone explain how this translates for average American citizens? What have been the effects, if any, of consistently trading at a deficit since the 80s?
I've been trying to wrap my head around it, but it seems like there are so many factors at play that the effects aren't obvious.
My intuition is that maintaining trade deficits could cause inflation since US often needs to print money to service its debts. But, that only depends on consistent budget deficits. Inflation also depends on Fed rate somehow...Do consistent deficits increase housing prices? I'm lost..
I hardly know anything about econ. But, my gut feeling is that the effects of 40 years of trade deficits should be clearer than they are. It feels like maybe the status quo has been artificially propped up.
One issue with the story is he suggests the people selling America stuff, say China end up accumulating American land and owning the country but it's not what generally happens in practice. In practice foreigners tend to end up either with US dollar debt, which tends to inflate away, or equity in US companies, of which YCombinator and similar churn out hundreds of new ones each year.
Another thing is foreigners may end up buying some US real estate but the likes of Amazon ends up taking over much of the worlds retail industry as local shops close around the globe.
For reasons like this it's probably not worth worrying too much about the deficit and leaving it to market forces to figure out.
In much of the western US, especially Arizona, there are enormous farms growing water-intensive crops, in particular alfalfa. These farms are owned by assorted entities in the Middle East, and the crops are shipped overseas.
This is an enormous problem. The Colorado River basin is already over-allocated and there is not enough water to go around. But due to how water rights work, any entity can purchase an open-ended amount of our already endangered water supply and do as they please with it.
At this moment it isn't a critical problem, because we do have enough other agriculture and water to support ourselves. But with the direction the climate is heading, eventually we will have a drought of such severity that the water used by those farms makes or breaks us.
During the Great Famine in Ireland, the island consistently produced more than enough food to feed its citizens; it was all simply sent overseas.
It's a self-correcting problem - if the dollar starts losing value, that strengthens or our ability to export. And if countries want to manipulate their currency to maintain their ability to export, then they are helping pay to maintain the balance.
> But imagine that the Japanese both want to get out of their U.S. real estate and entirely away from dollar assets. They can’t accomplish that by selling their real estate to Americans, because they will get paid in dollars. And if they sell their real estate to non-Americans—say, the French, for euros—the property will remain in the hands of foreigners. With either kind of sale, the dollar assets held by the rest of the world will not (except for any concurrent shift in the price of the dollar) have changed.
> The bottom line is that other nations simply can’t disinvest in the U.S. unless they, as a universe, buy more goods and services from us than we buy from them. That state of affairs would be called an American trade surplus, and we don’t have one.
> But under any realistic view of things, our huge trade deficit guarantees that the rest of the world must not only hold the American assets it owns but consistently add to them. And that’s why, of course, our national net worth is gradually shifting away from our shores.
Which companies "enabled it". Which companies got fined for brexit? Facebook AND Cambridge Analytica did and did.
Look what for example Cargill UK "assets" were before brexit and what they are now.
Yes sounds like conspiracy theory, but point is most other comments here do not seem to understand that economic war is constant, permanent, global. and wars do need more then one party to be war. in economic war all participants are either attacking or they stop to exist. And USA IS attacker, because it still exists.
globalism means you plunder from longitude 0-10 then you plunder from longitude 10-20... until you are biting your own ass. or russia will stop you at longitude 28, because russia enslaved / robbed their own people so much that there is nothing to extract.
so do you want for USA to rob its own citizens or do you want USA to rob other parts of the world.
or we can globally change economic model and start being sustainable?
I will just give a small example using black leather jackets.
Black leather jackets are indestructible, you can spill any sort of fluid on them, try to light them on fire (they won't catch fire) throw them in the dirt etc.
They never go out of style either, there is basically no reason why an adult should own more than one black leather jacket.
Now think of how many black leather jackets do you own.
See? People have to find within themselves the will to stop their consumerism , not with this sort of central planning idiocy. And it's not granted that doing away with consumerism is desirable either.
Like for example Trump's impact on American society was much better when he was buying planes, yachts, supercars and foreign models than what it has become of him now that he has stopped pursuing those things.
None. I don't really understand this analogy.
I mean... if we are going to have the EPA and environmental standards, then it stands to reason that we must tax imports from countries that do not. Otherwise we are just moving the pollution elsewhere while burning even more fuel to ship products here. Right? It kind of shows that a lot of environmentalism is just NIMBY-motivated. It's fine if we trash other peoples' back yards. But a lot of our big environmental problems are global, so not only is this hypocrisy but it doesn't work.
It's good that we have workers' rights and OSHA, but the same logic applies. Otherwise we are just exploiting workers elsewhere.
On a somewhat tangent... I find it kind of disturbing that the one area where I have some agreement with MAGA is the least popular and most roundly criticized MAGA policy, and the one most likely to result in an electoral defeat.
Most of the other stuff in MAGA -- isolationism, a love for strongman rule (at home and elsewhere), authoritarianism, cults of personality, misogyny, racism, etc. -- is stuff that I find horrific, but the only thing people really care about is short term economic outcomes.
Being “in favor of some trade restrictions and reindustrialization” does not mean you’re taking a MAGA position. It means you just haven’t been paying much attention to policy, and so you’re basing your ideas of the political options on superficial crap. The result of uninformed citizenry is stuff like what’s happening right now, with the markets going into free fall.
Objectively I don't think Biden was a bad president, and no I didn't vote for Trump.
They also never took a principled stand on it. Biden and Harris never said "the trade policy of Reagan and Clinton was a mistake and we are reversing it." If Harris had said that, she would have flipped Michigan and Wisconsin and maybe Ohio. With one sentence. Throw in "the Iraq war was a mistake, and while I support Ukraine we need to make sure we don't repeat the mistakes of the past" and she might have flipped a few more.
If that's at all what Harris thinks, then the Democratic Party has an enormous communication problem. They don't know how to connect and they don't claim their wins. They sound like their whole communication agenda is set by consultants and PR people, because it is, and when people hear that they dismiss it as bullshit because everything consultants and PR people say is bullshit. That communication style is a huge contrarian indicator. When people hear a press release they tune out.
The right has learned how to talk to people. Or rather, they've un-learned the communication playbook of the latter half of the 20th century. That's why they're winning.
I knew Harris was going to lose when she skipped Rogan for SNL. I'm not a big Rogan fan (he's gone way downhill since his early years) but he's how you reach people today. Nobody cares about SNL.
I think a good first step would be to start listening to people like AOC -- not necessarily about all her policy views but about how she communicates. She communicates like a 21st century politician, not like someone from 1980.
I am not from the US, but I perceive the same problem in my country of residence (and in other countries I know people from).
The main issue I see is that politics became a sort of entertainment. So a more serious politician (the adults in the room, so to say), communicate in a fairly dry, and even careful tone. And that happens because politics is supposed to be a dry and boring subject.
Budgets, policies, et cetera and so forth, all those are dministrative administrative, not something to be decided with emotions.
But that doesn't lend itself well to communication. So what people pay attention to is the far right buffon yelling about white replacement or such bullshit.