U.S., China will avoid acting ‘extremely foolish’ on trade, Warren Buffett says
Billionaire Warren Buffett on Saturday said it is unlikely that the United States and China will come to loggerheads on trade, and the countries would avoid doing “something extremely foolish.”
“The United States and China are going to be the two superpowers of the world, economically and in other ways, for a long, long, long time,” Buffett said at Berkshire Hathaway Inc’s annual shareholder meeting, and that any tensions should not jeopardize the win-win benefits from trade.
“It is just too big and too obvious … that the benefits are huge and the world is dependent on it in a major way for its progress, that two intelligent countries (would) do something extremely foolish,” he said. “We both may do things that are mildly foolish from time to time. There is some give and take.”
The Trump administration has drawn a hard line in trade talks with China, demanding a $200-billion cut in the Chinese trade surplus with the United States, sharply lower tariffs and advanced technology subsidies, people familiar with the talks said on Friday.
Buffett, 87, and his longtime partner and fellow billionaire Charlie Munger, 94, also took pointed questions on Wells Fargo & Co, politics, guns, healthcare and their investment choices from shareholders, journalists and analysts at the Berkshire meeting in Omaha, Nebraska.
Buffett defended Wells Fargo and its chief executive, Tim Sloan, in response to a question asking when Berkshire would ditch the bank, one of its largest common stock holdings. Many shareholders applauded the question.
He said the bank committed the “cardinal sin” of incentivizing employees into “kind of crazy conduct,” for which U.S. regulators imposed $1 billion of fines last month over lending abuses.
“Wells Fargo is a company that proved the efficacy of incentives, and it’s just that they just had the wrong incentives,” said Buffett.
But he maintained that the bank is not “inferior” as an investment or morally to its main banking rivals.
Berkshire owned $25.2 billion of Wells Fargo stock as of March 31, down 14 percent from year end as a series of scandals weighed on the bank’s reputation.
Wells Fargo investors last week gave strong backing to the bank’s directors and executives on Tuesday, indicating confidence in its overhauled leadership to rebound.
Buffett addressed his alliance with another banker, JPMorgan Chase & Co’s Jamie Dimon, and Amazon.com Inc’s Jeff Bezos to tackle healthcare. Buffett said U.S. healthcare costs are a tapeworm on the economy, and he said they expect to name a chief executive for that venture within a couple months.
The questions also elicited views on politics from the “Oracle of Omaha” and Munger.
Buffett, for instance, suggested U.S. President Donald Trump should be an “educator-in-chief” on the invisible benefits of trade.
Munger, meanwhile, answered a question on steel tariffs imposed by the White House by acknowledging that U.S. producers are hurting.
“Even Donald Trump can be right on some of this stuff,” he said.
Asked a pointed question why Buffett is willing to do business with gun makers, Buffett sharply retorted, “I do not believe in imposing my political opinions on the activities of our businesses.”