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At the Berkshire Hathaway meeting a couple of weeks ago Warren Buffett and Charlie Munger were asked if there was a win-win for China and the USA on trade.
The perspective offered by this 87-year-old and this 94-year-old was quite reassuring – after all, these guys have seen many wars come and go, hot ones, cold ones and trade ones.
Warren said that the US and China are going to be the superpowers of the world for a long, long, long time, and they have a lot of common interests
Both Democrats and Republicans, on balance, believe in the benefits of free trade.
“It is a win-win situation when the world trades, basically….the benefits are huge, and the world’s dependent on it in a major way for its progress.”
With his historical knowledge Buffett was able to recall that in 1970 US exports amounted to 5% of GDP, and imports were around 5%.
“Now people think we don’t export a lot of things. Our exports are 11 and a fraction percent of GDP. They’ve more than doubled as a share of this rising GDP. But the imports are about 14 1/2 percent, so there’s a gap of three percent or thereabouts.”
“And I would not like that gap to get too wide. But when you think about it, it’s really not the worst thing in the world to have somebody send you a lot of goods that you want and hand them little pieces of paper. [China buys US Treasuries, US shares]…….And so the world is getting more claim checks on the United States……
…….Over time, you don’t want the gap to get to be too wide because the amount of claim checks you are giving out to the rest of the world could get a little unpleasant under some circumstances. But we’ve done remarkably well with trade. China’s done remarkably well with trade. The countries of the world have done remarkably well with trade. So it is a win-win situation…we will not sacrifice – the world, I mean – will not sacrifice world prosperity based on differences that arise in trade.”
Munger chips in: “China is advancing faster economically, because it started from a lower base and they’ve had a little more virtue than practically anybody else in the world in having a high savings rate. And of course, a country that was mired in poverty for a long, long time, and that assimilates the advanced technology of the world, and has a big savings rate, is going to advance faster than some very mature company like Britain or the United States….. But I think we are going to get along fine….. I’m very optimistic that both nations will be smart enough to realize that the last thing they should do is have any ill will for the other.”
Steel tariffs
Warren says that BH subsidiaries have seen stee
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