Value Column von Hans Peter Schupp

10 June 2025

When Governments Think Like Corporations – A Case Study of U.S.-Inc.

Hans Peter Schupp, managing partner of Fidecum AG and portfolio manager of the Contrarian Value Euroland fund, analyzes US politics and the consequences for his fund.

As soon as the US government announces new economic policy plans, commentators start to frown. The goals seem arbitrary, the measures erratic, the strategy illogical at best. Tariffs drive up prices. The confidence of international partners is waning. The debts remain. International creditors are reconsidering their investments. Bond markets react nervously. The dollar depreciates and US interest rates rise. How is this supposed to make America great?

The lack of understanding of Donald Trump’s decisions is partly due to the fact that most people view it from an economic perspective. For business economists, on the other hand, many things seem familiar – from business plans and restructuring concepts. In fact the US President is actually pursuing exclusively business objectives for US Inc.:

–   Tariffs and a weaker currency improve competitiveness at the expense of the competition. Economic performance – the turnover of US inc. is increased.

–  Leaner processes, less bureaucracy, cutting social spending (wages) are classic methods of cost reduction in distressed companies.

–  America first is nothing other than a focus on the core business – international cooperation and commitments are only accepted if they pay off.

–  The Mar-a-Lago Accord aims to clean up the balance sheet. Maturity extensions and coupon adjustments are to be enforced with creditors.

Trump’s loud negotiating style may be irritating – but it follows a clear logic

In business administration, this type of approach is classified as distributive negotiation. In this form of negotiation, maximum demands are combined with threats in order to maximize one’s own advantage. A compromise is then based on the so-called BATNA (Best Alternative to a Negotiated Agreement) – the best realistic option available to a negotiating partner in the event of failure.

Donald Trump applies this strategy consistently: confrontational, demanding, intent on exercising power. He starts with extreme positions, puts opponents under public pressure and remains unyielding to the end – unless his own costs rise too sharply. When the stock markets crashed in April 2025 following the introduction of new tariffs, he suspended them again without further ado. What at first glance appears to be political arbitrariness actually follows the rules of power negotiation – just not the cooperative, consensus-oriented tradition. Instead, he is loud in his announcements and flexible in his retractions. A game with risk – but never beyond that.

All of this could easily be presented as a case study in an MBA seminar. However, states do not follow the same rules as companies.

Companies strive for profit and market share, states for welfare and security of supply. While companies cut costs and close unprofitable areas, governments maintain public services even without a return on investment. Companies act in the interests of investors, states in the interests of all citizens. Companies concentrate on profitable core businesses, while states ensure nationwide basic services.

The consequences for investors

First of all, things are never as bad as they seem. The loud tone is part of the negotiating tactics – short-term excitement is often part of the game. On the markets, it is therefore worthwhile not reacting too hastily to political signals. Those who understand the logic behind them remain calm – even if the stock markets react in the short term. The more important long-term question is: can this strategy work? Can the profits of US Inc. be increased at the expense of all other countries?

We are not so sure. If a company displaces a competitor, its market share, turnover and profit increase while demand remains the same. If an economy acts in this way, the advantages of the international division of labor are jeopardized. Demand as a whole then threatens to shrink. The consequences could even be the fall of US Inc. And a redirection of capital flows towards Europe. This would not be a bad development for our fund.

Our investment approach:

Our Contrarian Value Euroland Fund (ISIN: LU0370217092) has remained model consistent since 25 years: we invest in undervalued companies with a solid business model and a viable potential. We act with the mindset of an entrepreneur and buy stocks, which are neglected by the market.

About the author:
Hans Peter Schupp, is a managing partner of Fidecum AG and the portfolio manager of the Fidecum Contrarian Value Euroland Fund

Convenience translation !