Value Column by Hans Peter Schupp

21 SEPTEMBER, 2026

Sinking stones in your own harbor

by Hans Peter Schupp, managing partner of Fidecum AG and advisor for the Contrarian Value Euroland Fund (ISIN: LU0370217092), about the new mercantilism.

The first irony

Donald Trump loves tariffs. His opponents regularly explain why this is not a particularly good idea from an economic perspective: tariffs are initially paid by the importer and, through higher costs, place a burden on businesses and consumers in the country itself. This is precisely where the first irony of ‘America First’ lies: a policy intended to strengthen America initially exacts a high price from the Americans themselves – higher costs, reduced consumption and lower prosperity.

The logic behind retaliatory tariffs

The answer to this is often: retaliatory tariffs. But economic logic does not change depending on the nationality of those imposing them. If tariffs place a burden on the domestic economy, the same applies to retaliatory tariffs. They make imports more expensive, disrupt supply chains and force businesses and consumers to resort to more expensive alternatives. This effectively turns one mistake into two.

Politically quite attractive

Why do people do it anyway? Because political and economic rationality are not the same thing. Tariffs demonstrate the ability to take action, visibly protect individual sectors and generate revenue for the state. The costs, on the other hand, are spread across many businesses and consumers – which is politically convenient, as hardly anyone feels directly affected.

Even more important is the symbolism. Anyone who fails to respond to tariffs is quickly seen as weak. Retaliatory tariffs therefore send a clear message: we won’t stand for this. From an economic perspective, this is an unconventional form of strength. You make your own imports more expensive to show the other side that you want to be taken seriously.

Economically back to the 17th century

In Europe, too, calls for state intervention are growing louder. This is a manifestation of a new form of mercantilism. There is little that is new about this. Even classical mercantilism relied on state control, bolstered the state coffers – and placed a burden on consumers. Today, the promise is this: domestic industry is to be strengthened. The US is using its tariff policy to tie production and investment more closely to its own territory. China is promoting strategic industries, protecting key sectors and creating overcapacity, which subsequently floods the European market. Europe finds itself caught in the middle – and is coming under increasing pressure to intervene more forcefully as well.

This raises the question: must Europe follow this path too? Does a bad idea become a better one simply because others are implementing it as well?

The second irony

The better response might lie precisely in harnessing the resulting pressure to adapt. A decline in exports is painful in the short term. In the long term, however, it forces companies to tap into new markets, become more efficient and use capital more productively.

Germany is familiar with this mechanism from the pre-euro era. The strong Deutschmark was no boon for the export industry, but rather a constant source of competitive pressure. Any company wishing to successfully compete internationally despite a strong currency had to be more productive, more innovative and more disciplined in its cost management.

For Europe, Trump’s trade policy could, of all things, accelerate the very adjustments that have been put off for years: investment in infrastructure, energy, digitalization, defence and industrial capital stock. Therein lies the second irony of ‘America First’: the attempt to strengthen America through protectionism could, in the long term, strengthen its competitors.

The third irony

Fewer exports also mean fewer real goods in exchange for American IOUs. Ironically, it is ‘America First’ that is leading to Trump’s trading partners not only supplying fewer goods to America – but also extending less credit to the US.

Our investment approach

For 30 years, the Contrarian Value Euroland Fund has been investing in undervalued European companies with potential and a transparent business model. Our philosophy is entrepreneurial: we buy companies, not shares. Accordingly, we analyse business models from an owner’s perspective – and, where necessary, deliberately go against the prevailing market consensus.

Particularly in a world of increasing political intervention, it is all the more important to distinguish between short-term headlines and sustainable competitiveness.

About the author:

Hans Peter Schupp is a managing partner of Fidecum AG.

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