Transcript: The uphill battle to beat Trump

This is an audio transcript of the FT News Briefing podcast episode: ‘The uphill battle to beat Trump’

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Marc Filippino
Good morning from the Financial Times. Today is Wednesday, January 17th, and this is your FT News Briefing. 

The Iowa caucuses tell us a lot about how the US presidential election is gonna shake out. And pay cheques aren’t growing as much as they used to. Plus, the European Union is instituting a tax that will hit carbon-heavy imports, but that might have some unintended consequences for the rest of the world. 

Alice Hancock
That creates a sort of two-tier system where all the sort of expensive and green production gets sent to Europe, and then the steel produced using coal will get sent to developing nations that have less stringent climate laws. 

Marc Filippino
I’m Marc Filippino and here’s the news you need to start a day. 

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Wage growth is slowing across major economies. Take the US. Year-on-year growth for advertised wages and salaries was 3.8 per cent in December. That’s down from 9.5 per cent in late 2021. It’s also down in the eurozone and in the UK. Now, this is the kind of thing central bankers have been looking for in order to cut interest rates. Lower wages mean that there’s less money to spend, which in theory should help get inflation under control.

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So by this point, you probably know that Donald Trump won the Iowa caucuses on Monday in a landslide. It was the first time voters got to choose their pick for the Republican presidential nominee.

News clip
(Cheering crowd)

Now, we all pretty much knew that that was gonna happen going into the caucuses. But the gap between first and second place was still astonishing. Trump won by just over 50 per cent of the vote.

Donald Trump voice clip
We wanna thank the great people of Iowa. Thank you. We love you all.

Marc Filippino
Florida governor Ron DeSantis came in a very distant second in Monday’s contest. And former UN ambassador Nikki Haley was third in Iowa.

Donald Trump voice clip
I wanna congratulate Ron and Nikki for having a good time together. We’re all having a good time together.

Marc Filippino
The FT’s Lauren Fedor is in Iowa, and she joins me now to talk about where the race is headed. Hey, Lauren. 

Lauren Fedor
Hi, Marc. 

Marc Filippino
All right. So Donald Trump, as I said, won by a lot. But just give me a sense of the magnitude here. What position does this put the former president in? 

Lauren Fedor
Well, you know, it’s record setting. No Republican candidate has ever received such a large vote share in the Iowa caucuses before. It sets the tone for the rest of the race. He is just the undisputed frontrunner in this contest. 

Marc Filippino
We should remind listeners that this is the very first state to vote for the Republican nominee. So just how representative is Iowa of the other states? Like, how seriously should we take these results? 

Lauren Fedor
So winning the Iowa caucuses does not mean that you get the nomination or that you win in November in that general election. And I think we’ll see that contrast in the next couple of days heading into New Hampshire. The primary there is next Tuesday. And the electorate in New Hampshire is very, very different than the electorate in Iowa. Out here, the voters tend to be much more socially conservative. This is a very evangelical Christian electorate. Up in New Hampshire, the electorate is much more centrist, much more moderate. Those people are less likely to support Trump. And that’s something that someone like Nikki Haley is really banking on. She’s trying to shore up support from those voters and turn her third place finish out here in Iowa into a second or even a massive upset, and really kind of change the course of the narrative here. 

Marc Filippino
OK. What about DeSantis in New Hampshire? 

Lauren Fedor
He’s doing pretty badly in the polls. I mean, he’s in the single digits there. Just the day after the Iowa caucuses, he didn’t actually go to New Hampshire. He went to South Carolina first. So if we look ahead in the calendar after the New Hampshire primary, the next big contest will be the South Carolina primary at the end of February. 

Marc Filippino
Yeah. And, you know, presidential elections in the United States, they’re a bit of a slog. We have just such a long way to go. And you have these two very different narratives coming out of Iowa. One is that Trump had a major win, but also that winners in Iowa don’t always go on to take the nomination. So what is your takeaway then, Lauren? 

Lauren Fedor
Look, Marc, you’re absolutely right. This is a marathon, not a sprint. But there are a couple of important things to point out. One is just that part of the marathon for Donald Trump is not just the campaigning, but the legal issues that he’s dealing with in the background here. So while Haley on Tuesday was in New Hampshire and DeSantis on Tuesday was in South Carolina, Donald Trump was expected to be in New York where he had a court appearance in a defamation trial, which is one of many trials that he is potentially facing this year. But Donald Trump retains a strong grip on the Republican grassroots that are going to ultimately select their party’s nominee for the White House. There are paths for Nikki Haley in particular, and perhaps Ron DeSantis to become the party’s nominee. But right now, that seems like a real long shot. 

Marc Filippino
Lauren Fedor is the FT’s deputy Washington bureau chief. She’ll be covering the 2024 US presidential election all year. Thanks, Lauren. 

Lauren Fedor
Thanks, Marc. 

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Marc Filippino
A federal judge yesterday blocked two US budget airlines from merging. JetBlue wanted to buy its rival Spirit for nearly $4bn. The US airline industry is dominated by four big carriers, and if the JetBlue-Spirit deal had gone through, it would have controlled about 10 per cent of the market. But the judge ruled that this deal would violate antitrust laws, and that Spirit’s customers would probably see higher prices. Shares in Spirit sank 47 per cent on Tuesday. JetBlue’s shares gained nearly 5 per cent.

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In just a couple of years, the European Union will impose the world’s first tax on emissions from carbon-intensive imports like steel. And other countries will probably adopt similar taxes down the line. So the EU’s tax will give the world an early preview of what happens when the race to decarbonise is taken at different speeds by different countries. Here to talk to me about this is Alice Hancock. She’s an EU correspondent for the FT. Hi, Alice. 

Alice Hancock
Hey, Marc. 

Marc Filippino
So this would apply to anyone importing carbon-heavy steel into the EU. But let’s use China as an example because Europe is a really important market for the country. What would it do to imports from China? 

Alice Hancock
So this tax would mean that the emissions created during the production of Chinese steel will be charged. There’ll be like an import tax on it when they send it to Europe. And the idea is that that would bring Chinese imports into line with what EU producers already have to pay when they pollute inside the EU. 

Marc Filippino
And what would that do to European companies that rely on steel imports? 

Alice Hancock
There is a big fear in Europe that indeed production will get reshored somewhere else. So you might decide that actually it’s too expensive to export to Europe. So what I’m gonna do is actually export to another country that doesn’t have such stringent rules. Or . . . that creates a sort of two-tier system where all the sort of expensive and green production, if you like, gets sent to Europe and then the steel produced using coal, for example, will get sent to developing nations that have less stringent climate laws. 

Marc Filippino
What is this gonna do to steel prices more broadly? Do we have a sense? 

Alice Hancock
It’s hard to tell at the moment because the measure will come into force fully in 2026. There’s a trial period at the moment whereby producers have to report their emissions, but they don’t actually have to pay the tax. But certainly there are a lot of fears from the car industry, from, you know, turbine producers, all sorts, that this could push up their primary material costs. And in a world where it’s not a great economic outlook, that’s not very popular. 

Marc Filippino
OK. So that complicates things. What if other countries start adopting similar taxes? 

Alice Hancock
I mean, in a way, it would be good in the sense that it will make it, the EU measure, less unique and therefore fairer, if you like, across the world. But the problem is that all these measures will probably be slightly different. It will include slightly different systems, maybe slightly different reporting standards, more forms to fill in. So for each jurisdiction you’re exporting to, you might have to do, you know, a whole raft of paperwork and pay all these different fees. And also, if different countries set different standards for what they consider to be a green product, or how much should be charged for different levels of carbon emissions, in fact, it could just end up with a whole sort of quagmire of different definitions for these things and therefore ineffective climate policy. 

Marc Filippino
OK, so given that idea, Alice, what does this tax tell us about the fight against climate change more broadly? Anything?

Alice Hancock
It shows that trade is being used more and more as a climate measure or a way to cut emissions. In fact, it was interesting to see — I was at COP28 in December, and it was the first COP that had a so-called trade day. So there’s definitely more and more of a focus on trade flows, supply chains, so forth, and cutting emissions throughout those as a way to mitigate emissions. 

Marc Filippino
Alice Hancock is an EU correspondent for the FT. Thanks for your time, Alice. 

Alice Hancock
Thanks so much, Marc. 

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Marc Filippino
You can read more on all of these stories at FT.com for free when you click the links in our show notes. This has been your daily FT News Briefing. Make sure you check back tomorrow for the latest business news. 

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