Good morning. Chinese rare-earth magnet companies are finding workarounds to their government’s onerous export restrictions, as they seek to keep sales flowing to Western buyers without falling afoul of Chinese authorities.

• What they are doing: The companies are tweaking magnet formulas to avoid using certain restricted rare-earth elements and devising other strategies to get powerful magnets out of the country, like embedding them in motors, according to employees of several large Chinese magnet companies and Western firms that buy from them.
   
• Determined to succeed: The strategies—which are legal—don’t work perfectly and the new magnets sometimes behave differently than traditional ones. But Chinese companies have huge and growing magnet-making capacity, and say they are determined to find legal ways to maintain exports.
   
• Background: The drive is the latest twist in a long-running battle between China and the U.S. over rare earths. China dominates the global supply of rare earths and the magnets they are made of. They are crucial to making everything from cars to wind turbines and jet fighters.

Treasury warns PE firms after $11.5 million sanctions settlement.

A Chicago private-equity firm agreed to pay $11.5 million in a settlement with the U.S. Treasury Department for allegedly working indirectly with a sanctioned Russian oligarch, Risk Journal’s Richard Vanderford reports.

Context: The Treasury said its settlement with IPI Partners, announced Tuesday, should be a warning to private-equity firms—and capital markets participants more broadly—that they face sanctions risks from complicated corporate arrangements that can obscure connections to sanctioned persons.

Texas investigating Shein labor, products.

Fast-fashion retailer Shein is facing an investigation into its labor practices and products by the Texas attorney general’s office, Risk Journal reports

The investigation will focus on whether the company has misled consumers about product safety and ethical sourcing, Texas Attorney General Ken Paxton’s office announced Monday.

Context: Despite numerous investigations into Shein, said Dallas-based international trade lawyer Adrienne Braumiller, the move by Paxton reflects a broader trend of using consumer safety and ethical sourcing laws to challenge multinational corporations at the local level.

• Electronics trading firm Virtu, advised by U.S. Securities and Exchange Commission Chairman Paul Atkins before he joined the agency, will pay $2.5 million to settle the agency’s claims over deficient compliance controls.
   
• Costco became the latest and one of the biggest companies to sue the Trump administration over tariffs in an effort to secure a full refund should the Supreme Court rule the sweeping duties illegal.
   
• Risk Journal’s Mengqi Sun reports that the Commodity Futures Trading Commission has revised rules for sending out so-called Wells notices to bring more transparency to its enforcement process.
   
• To revive America’s initial public offerings, the government should ease disclosure requirements for smaller companies, said SEC Chairman Paul Atkins in a Tuesday speech at the New York Stock Exchange.
   
• San Francisco’s city attorney has filed a lawsuit against some of the nation’s biggest food manufacturers, accusing them of knowingly making and marketing harmful foods.
   
• The Federal Aviation Administration is ramping up its investigation into whether airlines complied with government-shutdown-related flight cuts.
   
• One of the U.K.’s top financial regulators has publicly censured the Institute of Certified Bookkeepers, alleging “serious deficiencies” in its supervision of anti-money-laundering practices among its members, Risk Journal reports.
   
• A coalition that tried and failed to block OpenAI’s conversion earlier this year is back with a new tactic: a California ballot initiative aimed at reining in the startup’s power.

Growth to slow as tariffs bite, but AI investments may cushion the blow.

The U.S. and global economies are set to slow next year as higher tariffs take full effect, but could grow more strongly than expected if the AI investment boom “broadens,” the Organization for Economic Cooperation and Development said.

In a quarterly report on Tuesday, the Paris-based research body forecast the U.S. economy will grow 2% this year and 1.7% next year, having expanded by 2.8% in 2024.

Global slowdown expected: The global economy is expected to expand by 2.9% next year, a slowdown from 3.2% this year. But the OECD warned that the slowdown could be more severe if new restrictions on exports of key goods such as rare earths and advanced computer chips were to be added to higher tariffs.

Europe’s green energy rush slashed emissions—and crippled the economy.

European politicians pitched the continent’s green transition to voters as a win-win: Citizens would benefit from green jobs and cheap, abundant solar and wind energy alongside a sharp reduction in carbon emissions. 

Impact: Nearly two decades on, the promise has largely proved costly for consumers and damaging for the economy. Europe has succeeded in slashing carbon emissions more than any other region—by 30% from 2005 levels, compared with a 17% drop for the U.S. But along the way, the rush to renewables has helped drive up electricity prices in much of the continent.

• Former Honduran President Juan Orlando Hernández walked out of prison Tuesday following a pardon by President Trump, fueling controversy in the U.S. and Honduras and political uncertainty in the poor Central American nation.
   
• A five-hour meeting at the Kremlin between Russian President Vladimir Putin and U.S. envoys Steve Witkoff and Jared Kushner concluded without reaching an agreement to end the war, but the talks were “useful” and “constructive,” a senior Russian official said.
   
• The White House said Monday that the U.S. military conducted two strikes on an alleged drug boat in the Caribbean in September, deepening questions about Defense Secretary Pete Hegseth’s role in an operation that led to the killing of two survivors.
   
• Israeli Prime Minister Benjamin Netanyahu on Tuesday said his country could reach an agreement with Syria—like the one President Trump called for a day earlier—if Damascus agreed to respect a buffer zone Israel says is crucial to its security.

• President Trump lashed out against immigrants from Somalia, saying he didn’t want them in the U.S. and describing them in disparaging terms ahead of an expected federal operation against Somalis in Minneapolis.
   
• Defense Secretary Pete Hegseth said Tuesday he didn’t see two survivors after an initial U.S. strike on an alleged drug boat in the Caribbean, but praised a top military commander for making the “correct decision” to sink the vessel.
   
• Lawrence Summers has been banned for life by the American Economic Association in a further blow to the former Treasury secretary and Harvard University president stemming from recent revelations about his ties to the late Jeffrey Epstein.
   
• OpenAI Chief Executive Sam Altman told employees Monday that the company was declaring a “code red” effort to improve the quality of ChatGPT and delaying other products as a result, according to an internal memo viewed by The Wall Street Journal.
   
• Companies such as Starbucks and Delta Air Lines are using employees as social-media influencers to showcase and market their workplaces.

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