Trump’s 100% Tariff Strike on China, Rare Earths Rally, Wall Street’s M&A Comeback, Deloitte’s AI Slip-Up & Retail Traders Outrunning the S&P

13th October 2025

Donald Trump fires another trade war shot, slapping a 100% tariff on Chinese imports and curbing exports of “critical software” after Beijing tightened rare earth controls. The move sent U.S. rare earth stocks soaring as investors bet on America’s domestic mining revival. Wall Street’s big banks are bracing for a blockbuster earnings week as M&A rebounds to pandemic-era highs. In Australia, Deloitte’s AI-written government report gets flagged for fake citations, and a refund. Meanwhile, retail traders are crushing the pros, with meme-stock-style momentum pushing their portfolios past the S&P 500. All this and more in today’s Read It And Eat!

IYMI (Incase You Missed It): Deloitte to partially refund Australian government for report with apparent AI-generated errors

Deloitte Australia will partially refund the 440,000 Australian dollars ($290,000) paid by the Australian government for a report that was littered with apparent AI-generated errors, including a fabricated quote from a federal court judgment and references to nonexistent academic research papers.

The financial services firm’s report to the Department of Employment and Workplace Relations was originally published on the department’s website in July. A revised version was published Friday after Chris Rudge, a Sydney University researcher of health and welfare law, said he alerted the media that the report was “full of fabricated references.”

Deloitte had reviewed the 237-page report and “confirmed some footnotes and references were incorrect,” the department said in a statement Tuesday. “Deloitte had agreed to repay the final instalment under its contract,” the department said. The amount will be made public after the refund is reimbursed.

A tendency for generative AI systems to fabricate information is known as hallucination. The report reviewed departmental IT systems’ use of automated penalties in Australia’s welfare system. The department said the “substance” of the report had been maintained and there were no changes to its recommendations. The revised version included a disclosure that a generative AI language system, Azure OpenAI, was used in writing the report. Quotes attributed to a federal court judge were removed, as well as references to nonexistent reports attributed to law and software engineering experts. Rudge said he found up to 20 errors in the first version of the report. APNews 

Major Headlines

• Trump puts extra 100% tariff on China imports, adds export controls on 'critical software'

President Donald Trump on Friday said the United States would impose new tariffs of 100% on imports from China "over and above any Tariff that they are currently paying," starting on Nov. 1. Trump also said that the U.S., on that same date, would also impose export controls on "any and all critical software." The president's announcement came hours after he threatened to slap "a massive increase" of tariffs on Chinese imports in retaliation for new controls that China imposed on exports of rare earths minerals from that nation. 

Around 70% of the global supply of rare earth minerals comes from China. The minerals are essential for high-tech industries, including automobiles, defense and semiconductors. Trump suggested earlier Friday that he would cancel a meeting with Chinese President Xi Jinping at the upcoming Asia-Pacific Economic Cooperation summit in South Korea because of China's new controls. Nearly every product imported into the U.S. from China already faces steep tariffs. While there are different levels of specific duties on imports, ranging from 50% on steel and aluminum, to 7.5% on consumer goods, the so-called effective tariff rate on Chinese imports currently is 40%, according to Wells Fargo Economics and analysts at the Federal Reserve Bank of New York. 

The announcement jolted global markets, U.S. stocks slipped as investors weighed the inflation risk of higher import costs, tech shares bore the brunt, and gold rallied above $2,600 as traders sought safety. Bitcoin and other cryptocurrencies initially dropped on the risk-off sentiment before rebounding, as some investors speculated capital could shift away from traditional assets if trade tensions persist. Analysts say this could set up another “TACO trade”: short for “Trump Always Chickens Out”, a pattern where markets panic over Trump’s tariff threats only for him to later soften his stance. Still, with China expected to respond and the election season heating up, the next few weeks could see another bout of trade-fueled volatility. CNBC

• Rare earths stocks surge after China tightens grip on global supplies

  
  

Shares of U.S. rare earth and critical mineral miners surged Thursday after China tightened restrictions on exports, fueling market speculation that the Trump administration will move more aggressively to invest in building out a domestic supply chain. USA Rare Earth soared 15%, NioCorp Developments surged about 12%, Ramaco Resources rallied more than 11%, Energy Fuels advanced over 9%, and MP Materials gained more than 2%. Albemarle popped about 5%, Trilogy Metals rose nearly 4%, and Lithium Americas advanced about 2%.

Beijing is now requiring foreign entities to obtain a license to export products that contain rare earths worth 0.1% or more of the goods' value, according to China's Ministry of Commerce. Companies will also need export licenses if they use China's extraction, refining or magnet recycling technology. "The White House and relevant agencies are closely assessing any impact from the new rules, which were announced without any notice and imposed in an apparent effort to exert control over the entire world's technology supply chains," an administration official told CNBC.

China imposed the restrictions ahead of an expected meeting between President Xi Jinping and President Donald Trump on the sidelines of the Asia-Pacific Economic Cooperation summit in Seoul, South Korea, later this month. Rare earths have been a major point of contention in trade talks between Beijing and Washington. Beijing dominates the global rare-earth supply chain and the U.S. is dependent on imports from China.

The White House and the U.S. critical mineral industry have accused China of manipulating the market to drive foreign competition out of business. Rare earths are a subset of critical minerals that are crucial inputs for U.S. weapons platforms, robotics, electric vehicles and electronics among other applications. The Defense Department struck an unprecedented deal with the largest U.S. rare earth miner MP Materials in July that included an equity stake, the first big salvo in the Trump administration's push to back the U.S. industry against China. The White House has subsequently taken stakes in Lithium Americas and Trilogy Metals, fuelling investor speculation that more deals will follow. CNBC

• US banks to reap bigger profits as deals rebound in third quarter

The six largest U.S. banks are expected to report stronger third-quarter earnings next week, catapulted by a rebound in investment banking.  JPMorgan Chase (JPM.N), Goldman Sachs (GS.N), Morgan Stanley (MS.N), Bank of America (BAC.N), Citigroup (C.N), and Wells Fargo (WFC.N) are forecast to benefit from resurgent dealmaking, while a resilient economy keeps borrowers in good shape, propping up consumer and commercial lending divisions. 

"There is going to be a lot of focus on any changes in the credit environment, impact of jobs data, and the overall economic outlook," said Mac Sykes, portfolio manager at Gabelli Funds. "Consumer confidence has been lower, the business confidence is still evolving, and we will watch out to see if there are any lingering concerns from the volatility seen earlier this year."

Investment banking has rebounded after stalling earlier this year following President Donald Trump's tariff announcements. Easing regulations and expectations for further rate cuts have also helped unlock mergers and acquisitions, prompting JPMorgan to call this summer one of its busiest for dealmaking. Hiring has also picked up. 

According to Piper Sandler analysts, 49 deals were announced in the third quarter through mid-September, up from 39 in the second quarter and 32 in the same period last year. Global M&A has reached $2.6 trillion, the highest for the first seven months of the year since the 2021 pandemic-era peak. Reuters

• Retail Crowd Beats the S&P 500 as Soaring Trading Sparks Concern

  
  

Citigroup Inc.’s basket of 46 stocks most favored by non-professional investors, which includes companies like SoFi Technologies Inc. and Riot Platforms Inc., is up 30% since the start of September, beating the S&P 500 Index’s 4.3% gain. Meanwhile, retail trading volume has increased to an all-time-high, the bank’s equity trading desk wrote in a research note Tuesday. 

“It’s been our contention for quite some time that the stock market gains have been largely propelled by a combination of FOMO and MOMO,” said Steve Sosnick, chief strategist at Interactive Brokers. “At this point, every dip is perceived as a buying opportunity, and uptrends are something to be chased.” Citigroup’s figures on trading activity defied weak October seasonality, with volume rising to the highest since the bank started tracking the data in 2018. Data from other banks shows a big jump in volume as well. 

From Oct. 2 through the close of trading on Oct. 8, retail investors accelerated their weekly purchases of stocks to $7 billion, an increase from the of $5.3 billion per week over the past two months, JPMorgan equity and quant strategist Arun Jain wrote in a note to clients on Wednesday. The buying spree coincided with renewed optimism around artificial intelligence stocks, fueled by a series of corporate deals, bets on interest-rate cuts and expectations for resilient earnings. 

In ETFs, retail flows hit $5.8 billion, the highest in nearly five months, with investors also adding to positions in precious metals such as SPDR Gold Shares ETF (GLD) and iShares Silver Trust ETF (SLV), according to JPMorgan’s Jain. Strategists at 22V Research analyzed Goldman Sachs Group Inc.’s retail favorite basket, which has gained roughly 20% since the start of September, and spotted overextended momentum in some stocks. The basket gained 1.2% on Friday in its 22nd up day in the past 25 sessions.  Yahoo.Finance

Minor Headlines

• Former British PM Sunak joins Microsoft, Anthropic in advisory roles Reuters

  
  

• Elon Musk names former Morgan Stanley banker as new xAI CFO Financial Times 

  
  

• Pacifist Japan Starts Investing in Defense Startups Financial Times 

  
  

•  Nvidia to continue sponsoring H-1B visas, Business Insider reports Reuters

  
  

• Cost of Citadel’s Planned Miami Tower Surges to $2.5 Billion Bloomberg

  
  

• White House Says Federal Workers’ Back Pay During Shutdown Isn’t Guaranteed Wall Street Journal

  
  

• Samsung set for highest Q3 profit in three years as AI demand lifts chip prices Reuters

  
  

• Bull Market Turns Three, More Stocks Have to Join to Keep it Going Yahoo.Finance