In the first quarter of 2025, Berkshire Hathaway (NYSE:BRK) reported a significant drop in its operating earnings announced on Saturday. The company has raised concerns about the potential impact of tariffs on future profits.

What Happened: The conglomerate’s operating earnings, which include its fully owned insurance and railroad businesses, fell 14% to $9.64 billion in the first three months of the year. This is a significant drop from the $11.22 billion reported in the first quarter of 2024.

According to the Berkshire report, the decline was largely driven by a 48.6% plunge in insurance-underwriting profit, which came in at $1.34 billion for the first quarter, down from $2.60 billion a year prior. Berkshire attributed this to the Southern California wildfires, which led to a $1.1 billion loss in Q1.

The company also suffered an approximate $713 million loss related to foreign exchange due to the dollar losing value in the first quarter. This is in stark contrast to the same period last year when it benefited from a $597 million forex gain.

"Our periodic operating results may be affected in future periods by impacts of ongoing macroeconomic and geopolitical events, as well as changes in industry or company-specific factors or events. The pace of changes in these events, including international trade policies and tariffs, has accelerated in 2025. Considerable uncertainty remains as to the ultimate outcome of these events," Berkshire said in the earnings report.

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"The amount of investment gains, losses in any given quarter is usually meaningless and delivers figures for net earnings per share that can be extremely misleading to investors who have little or no knowledge of accounting rules," Berkshire's statement read.

Berkshire also expressed concerns over President Donald Trump‘s tariffs and other geopolitical risks, stating that it’s unable to predict any potential impact from tariffs at this time. The company’s cash reserves also increased to a record $347 billion during the first quarter, up from around $334 billion at the end of 2024.

Why It Matters: The steep drop in Berkshire’s earnings is a cause for concern among investors, given the company’s wide-ranging portfolio of businesses. The decline in insurance-underwriting profit, in particular, highlights the risks associated with the company’s insurance operations.

The company’s concerns over tariffs and geopolitical risks also underscore the uncertainty facing global businesses. The increase in cash reserves, however, suggests that Berkshire is well-positioned to weather potential economic headwinds.

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