OMAHA, NE — Berkshire Hathaway reported a sharper-than-expected drop in operating earnings for the first quarter of 2025, signaling potential trouble ahead as Chairman Warren Buffett warned of growing economic uncertainty tied to U.S. tariffs and global instability.
The conglomerate’s operating earnings fell 14% year-over-year to $9.64 billion, dragged down by a significant decline in its core insurance underwriting business. The drop outpaced analyst expectations, falling short of consensus estimates from UBS and FactSet.
“The pace of changes in international trade policies and tariffs has accelerated in 2025,” Berkshire noted in its earnings statement. “Considerable uncertainty remains as to the ultimate outcome of these events.”
Wildfire Losses and Insurance Headwinds
The brunt of the earnings decline was attributed to a 48.6% plunge in insurance underwriting profit, which fell to $1.34 billion from $2.60 billion a year earlier. One of the key culprits: the devastating Southern California wildfires, which led to a $1.1 billion loss in the first quarter alone.
Buffett’s famously conservative insurance empire — including GEICO and Berkshire Hathaway Reinsurance — has long been a steady engine for earnings. But in Q1, even this pillar showed vulnerability.
FX Losses Compound the Impact
In addition to natural disaster claims, Berkshire faced currency headwinds. A weakening U.S. dollar resulted in $713 million in foreign exchange losses, a stark reversal from the $597 million gain booked during the same quarter last year.
The U.S. Dollar Index dropped nearly 4%, while the dollar fell 4.6% against the yen, contributing to unfavorable translations across Berkshire’s international holdings.
Buffett’s Warning on Tariffs and Trade Policy
Perhaps more worrying than the earnings miss was Buffett’s cautionary tone on the future, particularly around tariffs introduced by President Donald Trump. Berkshire said the effects of these tariffs — combined with a volatile geopolitical landscape — have created an “uncertain environment” that could cloud financial visibility for the rest of the year.
“We are currently unable to reliably predict the potential impact on our businesses,” the company said, citing concerns over supply chain costs, customer demand, and global pricing.
As the owner of BNSF Railway, Brooks Running, and a wide network of manufacturing and retail companies, Berkshire is especially exposed to fluctuations in global trade and transportation.
Net Earnings Plunge Despite Stock Gains
Despite Berkshire’s Class A shares rising nearly 19% year-to-date, its overall net earnings plunged by nearly 64% in Q1 due to a sharp decline in unrealized investment gains from publicly traded stocks. This is the tenth consecutive quarter in which Berkshire was a net seller of equities, choosing instead to let its cash pile grow to a record $347 billion.
Still, Buffett downplayed these investment fluctuations, urging investors to avoid over-interpreting net income volatility.
“The amount of investment gains (losses) in any given quarter is usually meaningless,” the company reiterated in its statement, “and delivers figures… that can be extremely misleading.”
Market Outperformance Amid Broader Weakness
While its short-term financials were challenged, Berkshire’s stock performance tells a more optimistic story. In 2025 so far, Berkshire has outpaced the S&P 500, which is down 3.3% as tech and international sectors reel from trade tension and monetary tightening.
Outlook: Stability in an Unstable World?
Berkshire Hathaway remains a bellwether for the broader U.S. economy. With a diversified portfolio and an unmatched war chest of liquidity, the company appears poised to weather future turbulence. But Buffett’s remarks suggest that even America’s most disciplined conglomerate isn’t immune to the cascading effects of trade uncertainty and macroeconomic flux.
