This is an audio transcript of the FT News Briefing podcast episode: ‘Trump ups the trade war ante’

Josh Gabert-Doyon Hey there, it’s Josh. Before we start, be sure to stick around after the show for a trailer for our new season of Untold. This season is called Toxic Legacy and it follows FT reporter Laura Hughes as she uncovers a lead poisoning epidemic across the UK. You can find a link to it in our show notes. Thanks.

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Good morning from the Financial Times. Today is Monday, October 13th, and this is your FT News Briefing. US President Donald Trump is threatening new 100 per cent tariffs on China. And Wall Street’s investment banks are raking in revenue. Plus, OpenAI’s ownership structure just keeps getting more complicated.

George Hammond There has been no absence of private capital for AI companies, but it’s approaching a scale where it’s hard to see where the next checks come from.

Josh Gabert-Doyon I’m Josh Gabert-Doyon and here’s the news you need to start your day.

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On Friday, US markets suffered their largest single-day drop since April after Donald Trump upped the ante on the trade war. The US president said he’d impose an additional 100 per cent tariff rate on China as well as new large scale export controls. Earlier in the week, Beijing had unveiled sweeping export controls of its own on rare earth minerals and magnets.

China plays a central role in supply chains for lots of the most important rare earths. The export controls and tariff threats are part of a long-running trade dispute between Washington and Beijing. Tensions calmed in May after the two sides agreed to unwind sky-high levies against each other, and Trump was expected to meet with Chinese President Xi Jinping at the end of this month. But Trump warned on Friday he might skip the meeting. The president said the new tariffs could come into effect on November 1st or even sooner.

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After a bit of a downturn, US investment banks are having a very, very good financial run. Investment banking revenues at the biggest Wall Street banks expected to top 9bn in the last quarter. We’re talking JPMorgan, Bank of America, Citigroup, Goldman Sachs and Morgan Stanley. That would be the first time they’ve reached that number since 2021.

We’ll have the actual figures later this week when they release earning reports. But here to tell me about what we can expect is the FT’s US banking editor Josh Franklin. Hi Josh.

Josh Franklin Hi.

Josh Gabert-Doyon I mentioned that revenues are gonna be hitting this $9bn figure. That would be the first time since 2021, so obviously a few years, but can you tell us a little bit about how big of a jump we’re actually seeing here?

Joshua Franklin So it’s looking like, according to analysts’ best guess, about a 13 per cent jump from the fourth quarter in 2024. This really would be the best quarter potentially for investment banking in over three years. So it’s been a slow road back, a slow recovery on Wall Street, but they hope this is gonna be the start of better things to come.

Josh Gabert-Doyon Why have banking revenues not been so great over the last couple of years, and why are things changing now?

Joshua Franklin So I think the real sea change in investment banking started back in the first quarter of 2022 when the Federal Reserve started lifting interest rates. And we kind of went into slightly more uncertain times when it came to the economy and also just borrowing costs to fund these deals went up. And there’s been optimism that on Wall Street, that there’s been this pent-up demand for dealmaking, but it has yet to really materialise in a meaningful way, at least until we got to 2025. There were hopes that with the arrival of the Trump administration, that was gonna be maybe taking a more lax approach to antitrust and approving deals.

Interest rates have also come down a little bit. But it’s been a slower road back this year, just with the uncertainty around the trade policy in the US and as well with things like Doge and government cuts. But now we’re really starting to see dealmaking pick-up in a meaningful way. That’s both on the M&A side, and also on what equity capital markets, so new companies listing on stock markets

Josh Gabert-Doyon And beyond that big M&A stuff, what about the other revenues that Wall Street banks rely on?

Joshua Franklin So it’s looking like it’s gonna be another good quarter for trading equities and fixed-income trading. And this is a pretty unloved business back in the 2010s. Low volatility, low interest rates just wasn’t conducive to the sort of business that banks like to do.

But since the Covid-19 pandemic, there’s just been a run of things that have caused markets to just kind of behave in crazy and less predictable ways that banks benefit from the sense that they facilitate a lot of this trading activity. There’s still ongoing concerns about the loan portfolios of the banking industry, especially as savings get drawn down that were built up during the pandemic. We’ve had a few issues with certain companies like the, the subprime auto lender Tricolor. There’s been a situation with First Brands, which is an older parts maker. So banks will give us an update in terms of the potential loan losses they’re expecting.

Josh Gabert-Doyon OK. And just stepping back, though, the Trump administration has also talked about loosening capital requirements on banks. What kind of impact is that having on earnings?

Joshua Franklin So far, I think we’re still waiting to see what the new direction is gonna be for bank regulation policy in the US in terms of the details. But certainly the mood music is very supportive for the industry. I think there’s gonna be more announcements going forward about it, but I think what we can tell at this point is that there is gonna be a real divergence between the US and other parts of the world. And there’s an estimate from one consultancy, Alvarez & Marsal, that estimates that an easing of capital rules under the Trump administration could unlock more than $2tn in lending capacity for these banks. So it could be pretty significant.

Josh Gabert-Doyon And what are analysts saying just about the financial performance of these banks over the next, you know, couple of quarters? Is this trend gonna continue this upward trend?

Joshua Franklin I think for investment banking, the hope is that this Trump bump that everyone was really excited for at the start of 2025, that the glass-half-full view on Wall Street right now is that was never cancelled because of what happened with “liberation day” and tariffs and everything. It was just delayed. And so back stretch of 2025 and going into 2026 there’s a lot of optimism that eventually this pipeline of deals that banks have been talking about for a couple of years now will eventually start like manifesting themselves in deals. Things rarely run how people expect them to, so I’m sure there’ll be more things that will complicate matters, but certainly the optimism is pretty strong right now.

Josh Gabert-Doyon Josh Franklin is the FT’s US banking editor. Thanks, Josh.

Josh Franklin Thanks very much.

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Josh Gabert-Doyon A new FT analysis has found that dozens of members of the European parliament hold second jobs in areas that overlap with their roles as lawmakers. The potential conflict of interests were declared by only eight out of the 59 MEPs holding paid side rolls. They include a Czech race car driver who does automotive consulting, all while engaged in EU negotiations on electric vehicle equipment and battery rules, and an MEP from Romania’s ultranationalist opposition who practices bankruptcy law, but is also leading negotiations for his party on EU insolvency policy. Both MEPs told the FT they did not see a potential conflict of interest. Parliamentarians in the EU are required to declare their outside financial interests if working on specific related laws.

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OpenAI became the world’s most valuable private company this month, but it’s still not entirely clear how its owners will get paid out. As more investors have flocked the company over the past few years, the ownership structure has become more and more complicated, and there are still ongoing negotiations with Microsoft about whether the company will move to a more conventional for-profit corporate structure.

Here to talk with me about it is the FT’s George Hammond. Hi George.

George Hammond Hey.

Josh Gabert-Doyon OK, George, just to start, can you help us understand OpenAI’s somewhat complicated ownership structure?

George Hammond I can try. I think first it’s worth just saying what OpenAI are trying to do here. So they wanna become the AI superpower company, and that means spreading out from the 800mn or so users they have today to billions and basically becoming for AI what Google has been for search that requires massive amounts of computing power, which costs a huge amount of money.

And in order to raise that cash, OpenAI has persuaded its investors of a couple of things. One is that it’ll be worth trillions of dollars one day, but the second is that investors will get a piece of the action by owning equity. There’s a major wrinkle to that, which is that to date, investors haven’t been able to own equity, and that’s because OpenAI was founded as a non-profit and it has a very convoluted corporate structure.

They are now trying to convert, as you say, into something a little more conventional, which would allow investors to own equity in that underlying for-profit. And the company is in the middle of negotiations with Microsoft, which will allow it to convert. So it’s a hugely complex process that it has to undergo just to get to the point where investors hold equity.

Josh Gabert-Doyon Yeah. And who are those other investors, apart from Microsoft, who have a financial interest in OpenAI?

George Hammond So Microsoft is OpenAI’s most important backer. They put a billion into the company in 2019 and have now put more than 13bn into the company. They’ve been a key technical partner and funder. There were also a series of very high profile venture capital firms, and increasingly there were other groups who were investing into opening eye. So there was recently a deal between Nvidia, the most valuable company in the world and OpenAI. There is also the non-profit which currently controls the company, and in the future structure will own around 30 per cent of the company according to the negotiations as they are now.

Josh Gabert-Doyon OK. And if you’re an investor right now who’s been fortunate enough to be able to invest in OpenAI, are you gonna be worried about the stake being diluted with all of this?

George Hammond So I think there will inevitably be some dilution of investors’ stakes in OpenAI. The company has committed to spend about $1tn dollars on computing power over the next few years, and that will mean raising a lot more money that will dilute investors. But OpenAI has promised to investors is we are spending a trillion as we grow to become a multitrillion dollar company. So you will get a smaller size of a bigger pie and it hopes that pitch to investors will be compelling.

Josh Gabert-Doyon Presumably the best way for investors to get a smaller slice of this bigger pie would be for the company to list itself on the public markets. What are some of the hurdles to that? Can you break it down?

George Hammond So in its current structure, OpenAI cannot go public. Once it has converted, that should be an easier run. There has been no absence of private capital for AI companies, but it’s approaching a scale where it’s hard to see where the next checks come from. So public markets will at some point, appeal. At the moment the company has focused really squarely on growth at the expense of profitability. And Sam Altman, the chief executive, told reporters last week that the company’s profitability was not in his top 10 priorities. So for public markets investors, that may be an issue.

And we’ve seen private companies, which have been feted by Silicon Valley investors try to go public and public investors balk at the fact that they are lossmaking. So that could happen here, but OpenAI will not be in a huge rush to go public given the demand for the company on the private markets. So this may be a question that they can resolve between now and then.

Josh Gabert-Doyon George Hammond is the FT’s venture capital correspondent. Thanks, George.

George Hammond Thank you.

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Josh Gabert-Doyon 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 tomorrow for the latest business news.

[UNTOLD ADVERTISEMENT PLAYING]

Laura Hughes The symptoms are small at first. You feel a little more tired than usual, perhaps a bit forgetful. You shrug it off as stress. After a while you feel a little more than tired. You feel unwell. It’s hard to tell what could be making you feel this way. Your diet, a long-running cold. It doesn’t happen all at once. Basic tasks are making you feel like you’re lost. Before you know it, it’s all-consuming. But the doctor’s standard tests don’t show anything. No one knows what’s happening. Inside your body, something has been accumulating. There is toxic lead inside you and it’s poisoning you.

My name is Laura Hughes and for the past two years I’ve been uncovering the United Kingdom’s perplexing relationship with lead. What I’ve found has shocked me.

Voice clip 1 I think the most terrifying thing is that once it’s happened, there’s not really an easy route out of it. The damage is done.

Voice clip 2 Ticking along, incrementing a little bit, a little bit more, a little bit more, a little more damage. A little more damage.

Voice clip 3 And you feel like a conspiracy theorist. If you talk to people, like neighbours are interested kind of, and they’re like, oh, you’re going on about that? OK.

Laura Hughes Every American child is tested for this, so why isn’t every British child tested for it too?

Voice clip 4 And they’re failing at one of the most basic functions of government, which is to protect its citizens.

Voice clip 5 If I report this, people are gonna hate me. I won’t move on with my life. And I was so petrified of being dragged across the coals for reporting them. And I still am.

Laura Hughes From the Financial Times. This is Untold: Toxic Legacy. Coming soon.