Finance • 03.05.25

Berkshire Hathaway’s Q1 Earnings Decline: Buffett Warns of Tariff Risks and Market Uncertainty

Warren Buffett’s Berkshire Hathaway recently disclosed its first-quarter earnings, revealing a significant drop in operating profits compared to the previous year. The company also expressed concerns about the potential impact of tariffs and geopolitical instability on future performance. This article explores the key financial figures, Buffett’s warnings, and what investors should watch in the coming weeks.

Operating Earnings Fall Short of Expectations

Berkshire Hathaway’s operating earnings for Q1 2025 declined by 14%, dropping to $9.64 billion from $11.22 billion in the same period last year. On a per-share basis, operating earnings fell to $4.47 per Class B share, missing analyst estimates of $4.72 (FactSet consensus) and UBS’s projection of $4.89.

Key Factors Behind the Decline

Insurance Underwriting Plunge: Profits from insurance underwriting plummeted 48.6% to $1.34 billion, down from $2.60 billion in Q1 2024.
Foreign Exchange Losses: A weaker dollar led to a $713 million forex loss, compared to a $597 million gain in the prior year.
Investment Portfolio Struggles: Berkshire’s publicly traded holdings saw significant volatility, contributing to a 64% drop in overall earnings year-over-year.

Buffett’s Warning: Tariffs and Geopolitical Risks

Berkshire Hathaway highlighted growing uncertainty due to trade policies, particularly tariffs imposed by the U.S. government. The company stated that it cannot reliably predict how these policies will affect supply chains, product costs, or consumer demand.

“The pace of changes in these events, including international trade policies and tariffs, has accelerated in 2025,” Berkshire noted in its earnings report. “Considerable uncertainty remains as to the ultimate outcome.”

Industries Most at Risk

Given Berkshire’s diverse holdings—including BNSF Railway, Brooks Running, and Geico—tariffs could disrupt logistics, manufacturing, and pricing strategies. The firm’s exposure to global markets makes it particularly vulnerable to currency fluctuations and trade restrictions.

Berkshire’s Cash Pile Hits a Record High

Despite earnings challenges, Berkshire’s cash reserves surged to $347 billion, up from $334 billion at the end of 2024. Buffett has struggled to find attractive investment opportunities, leading to a tenth consecutive quarter of net stock sales.

What’s Next for Berkshire’s Investments?

With limited acquisition targets, Buffett may continue repurchasing Berkshire shares or hold cash until market conditions improve. Investors will watch for any major deals in energy, infrastructure, or distressed assets.

Market Performance: Berkshire Outpaces the S&P 500

While the broader market struggles—the S&P 500 is down 3.3% year-to-date—Berkshire’s Class A shares have surged nearly 19%. This divergence suggests investors still trust Buffett’s long-term strategy despite short-term earnings volatility.

Conclusion: What This Means for the Market in the Coming Weeks

Berkshire Hathaway’s earnings report underscores broader economic concerns, including tariff risks, forex instability, and sluggish corporate profits. If trade tensions escalate, sectors like transportation, insurance, and retail could face further pressure. Meanwhile, Berkshire’s massive cash reserves position it to capitalize on market downturns. Investors should monitor: