By Legendary investor Warren Buffett’s multinational conglomerate Berkshire Hathaway Inc (NYSE: BRK.B) may take a hit as Donald Trump returns to the White House on January 20th.
That’s because Berkshire generates a significant chunk of its revenue from its home furnishings group, which includes Nebraska Furniture Mart, Jordan’s Furniture, and RC Willey.
All of these businesses could have a lot on the line as the President-elect makes good on announcing higher tariffs, not just on goods from China, but across the board following his inauguration later today.
US relies on imports for furniture
The US currently imports an estimated 50% (at least) of the raw materials needed to build furniture which makes this industry prone to a significant hit under Trump 2.0.
A significant chunk of these imports come from China, considering it’s the world’s largest furniture exporter at writing. Close to 30% of the furniture the United States imported in 2023 came from Beijing.
More importantly, even if Berkshire’s furniture companies diversify their supply chain away from China, to, say, Vietnam or Mexico, they’ll still have to manage up to 20% higher tariffs in 2025.
As the likes of Furniture Mart, Jordan’s Furniture, and RC Willey pass on the increased costs to consumers, demand for their products may decline, resulting in pressure on their top lines.
How big is Berkshire’s furniture business?
While Berkshire Hathaway is a fairly diversified business, higher tariffs weighing on its furniture companies could be meaningful considering it generated over $75 billion for the conglomerate in 2023.
The manufacturing business that includes the home furnishings group is currently among the most profitable operating segments of Berkshire Hathaway.
Additionally, Trump’s policies could lead to increased market volatility that may also hurt Berkshire’s investments and overall performance this year.
Note that the Class B shares of Berkshire Hathaway do not currently pay a dividend either to appear any more attractive for income investors.
Berkshire stock ended 2024 on a strong note
Despite potential challenges, UBS analyst Brian Meredith remains bullish on Berkshire Hathaway stock for 2025.
His “buy” rating on Class B shares of the conglomerate owned by the “Oracle of Omaha” is coupled with a $531 price target that indicates potential for another 14% upside from here.
Berkshire already ended last year with a close to 30% gain.
Still, UBS analyst has immense confidence that its management will succeed in delivering solid financial performance in 2025.
A fairly diversified portfolio, he added, could meaningfully help Berkshire Hathaway navigate the potential headwinds this year.
Earlier this month, the Consumer Financial Protection Bureau (CFPB) sued Berkshire Hathaway’s unit, Vanderbilt Mortgage & Finance, for ignoring red flags related to manufactured home loans.
The post Berkshire Hathaway could take a hit following Trump’s inauguration: here’s why appeared first on Invezz
