Trump’s economy on the ballot

0:03Good morning from the Financial Times. Today is Monday, November 3rd, and this is your FT News briefing. The Supreme Court is set to weigh in on the Trump administration's tariff policies, and we discuss what upcoming local elections tell us about America's political mood. Plus, the boom in solar energy is happening with or without the United States. China is producing a huge amount of solar panels which have pushed the price down. China now accounts for something like 8 in 10 of solar panels around the world. I'm Victoria Craig, and here's the news you need to start your day.

0:48America's highest court will hear arguments on Wednesday about President Donald Trump's use of emergency tariffs. Trump has said he considers the trade deficit a national emergency. He used that justification to invoke emergency powers and apply sweeping tariffs on nearly every U.S. trade partner this year. Two lower courts ruled that the president does not have that authority, but Trump's lawyers argue that his inability to make such a decision would, quote, thrust America back to the brink of economic catastrophe. Hanging in the balance of the Supreme Court's decision is the future of extra U.S.

1:23tariff revenue, which has amounted to tens of billions of dollars so far this year.

1:35Another crucial election season is upon us here in America. On Tuesday, it's state and local leaders whose names are topping the ballots. But national issues, like inflation, are the topics du jour. New Jersey's governor's race is one of those contests seen as a litmus test of the nation's political mood. Lauren Fedor, the FT's deputy bureau chief in Washington, has been talking to voters in New Jersey, and she joins me now. Hi, Lauren. Hi, Victoria. you. So New Jersey has a Democratic governor right now and tends to lean Democratic in presidential races. How are things shaping up there now? What's the mood on the ground?

2:10Yeah, so this year, the Republicans are feeling pretty good about the chances of taking back the governor's mansion. The polls show the Republican candidate Jack Cittarelli pretty much in a dead heat with the Democratic candidate, Mikey Sherrill. And I spent some time following Cittarelli around on the campaign trail last week, and there was a fair amount of energy and momentum surrounding his campaign. His team says they feel good. The Republican voters I spoke to said that they think this is their party's chance to take back the state. And how are both of those candidates trying to really define themselves around those big national issues?

2:48The name of the game here is the cost of living, affordability, inflation. and it's not just goods that you might see in the grocery store, it's also energy prices. Now, when it comes to the Republican side, they're choosing to blame the incumbent Democrats. The current governor of New Jersey is a Democrat. The statehouse has been controlled by Democrats. And so Jack Giorelli is saying, look, this is the Democrats' fault and we need to bring in a Republican to run the state to right the ship. On the Democratic side, Mikey Sherrill, who's currently a congresswoman, has really made the focus about Donald Trump and the Republicans at the national level.

3:25She's talked a lot about the trade war, for example, driving up prices for consumers and tried to paint her opponent really as being arm in arm with Trump here. President Trump has promised repeatedly that his policies will bring inflation down. Prices are still rising fairly swiftly across the United States. Are these elections across the country seen as a referendum on whether his economic agenda is working? I would say that it's a referendum potentially on not only the economic policy, but the Trump administration more broadly. So in New Jersey, Mikey Sherrill has really tried to focus on pocketbook issues, bread and butter economic issues and the cost of living.

4:05But she has also made clear that in her eyes, the Republican Party is the party of Trump and it's the party of chaos and disruption. And so she's not only talking about those economic issues, she's also talking about the presidency that we're seeing right now in Washington and Donald Trump pushing really the limits of executive power. So the race is neck and neck there in New Jersey. But across the river here in New York City, there's another election with national, I would argue, even international residents. Zeran Mamdani is a Democratic socialist, and he has been leading the polls to become the mayor of America's biggest city.

4:42Could these races set the stage for strategies of both the Republican and Democratic parties for the midterm elections next year? Absolutely. Look, voters are heading to the polls not only in New York City and in New Jersey, but in a variety of state and local races across the country. And so there are going to be a series of tests. For the Democrats in particular, I think they're going to be waking up on Wednesday morning hoping to have won all of these big contests, and then probably having a very robust debate about what the party's message should be heading into the midterms, and not only the midterms, but 2028.

5:21On the Republican side, they're looking for an upset here. I don't think in New York City, the Republican candidate there, Curtis Lewa, has been polling far behind Mom Donnie as well as Andrew Cuomo. So I wouldn't expect a Republican upset there. But in somewhere like New Jersey, if the Republicans could pull it off, You'll also see Donald Trump and his allies claiming that win as their own and trying to capitalize on that momentum heading into the midterms. So I think, believe it or not, with one year to go until the midterms, by the end of the week, everyone will have their eyes to next November.

5:54Lauren Fidor, the FT's Deputy Bureau Chief in Washington. Thanks for your time. Thanks for having me.

6:05Halloween might be over, but a leading private equity executive tells the FT that his industry could be made up by mostly zombie firms within the next decade. Per Franzen is the chief executive of Sweden's EQT. He warns that 80 percent of private capital groups could be unable to raise fresh cash. That would leave them to survive by feasting on existing investments. Companies have struggled for years to deliver returns to investors thanks to a slowdown in dealmaking. Instead, they've been ramping up fees from funds already on their balance sheets. But Franzen said this model isn't sustainable, and he warned that without wider industry changes, just a handful of P.E.

6:44firms will attract nearly all investment.

6:53President Trump has been quite vocal that he considers renewable energy to be a scam. But in this case, one man's trash is another country's treasure. China has laid solar panels on an area the size of Chicago, while solar farms have been popping up all across Southeast Asia, the Gulf, and parts of Africa. As in many cases, money talks and falling prices for new solar panels are making a compelling business case outside of America. The FT's clean energy correspondent, Rachel Millard, has been digging into this. Hi, Rachel. Hi. So let's talk about that business case, because countries like China are really leaning into the green energy transition.

7:30What does that mean for other places around the globe? Sure. So China is producing a huge amount of solar panels, which have pushed the price down. China now accounts for something like 8 in 10 of solar panels around the world. and the cost of solar panels has fallen to something like 90 % over the past decade and that has sort of dragged down the overall cost of building a solar project very considerably. So is there an example that sticks out to you of a country that the lower cost of solar panels has really helped? Sure, so South Africa is a really interesting example in that it has suffered for many, many years from these rolling blackouts in which the state utility ESCOM has been unable to supply power at the level people need.

8:14And so South Africa has really suffered economically from this as well. And the falling cost of solar combined with sort of changes to the rules around who can supply power in South Africa over the past few years has seen people really embrace solar panels and install them on their rooftops and provide electricity despite all the problems on a national level. And can you just walk us through one of the other examples that you mentioned in the story, because I think the Gulf is a really interesting case study as well. How are they using solar panels there? Yeah, the Gulf is fascinating. Obviously, mostly well-known for its oil resources, but also has a lot of sunshine.

8:50And they have also been embracing these low-cost solar panels to build generally kind of large-scale installations there. Often in those countries, particularly in Saudi Arabia, this is partly in order to free up more oil for exports. So at the moment, they burn a lot of oil in power stations. But if they can produce a lot more of their own electricity from solar power, then they can send a lot more oil around the world. All of these reasons are diverse and varied. And despite this effort to sort of incorporate solar into different kinds of energy generation, you spoke to some experts who say that the world isn't quite in a full transition to green energy yet.

9:29So what does that mean in practical terms? So it's great news in many ways that wind and solar is growing so fast. It really is helping to limit the carbon emissions that come from the energy sector. However, it is tempered by the fact that electricity itself is only a portion of overall energy usage and that if we therefore want to move at a much bigger scale away from fossil fuels, we need to decarbonise other areas such as heating and transport. But that sort of change is happening more slowly in many markets than people would hope across the energy system. And there's also the huge energy sucks of AI data centers around the world and their huge energy consumption.

10:14So is it really feasible to one day really pivot in a meaningful way to greener energy sources? I think that's really the big open question and a lot should become clear over the next few years in terms of how large the electricity demand from data centres really will be and indeed what sort of sources of electricity they will need. The evidence at the moment is that many of them, at least in the US, are looking to gas-fired power stations. But there are lots of encouraging signs that, you know, over the long run, electricity can help to meet some of this demand in particular because the costs of battery storage are also falling significantly and that can really help renewable electricity play a much broader role.

10:59And interestingly, again, those falling costs of batteries are really driven by the production of batteries in China once again. Rachel Millard, the FT's clean energy correspondent. Thanks so much for your time. Thank you. You can read more on all of these stories for free when you click the links in our show notes. This has been your daily FT News Briefing. Check back next week for the latest business news.

11:29Thank you.