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In the wake of U.S. trade negotiations with China, the U.S. Department of Commerce's Bureau of Industry and Security published a final rule on November 12, 2025, suspending implementation of the "Affiliates Rule" for one year. The "Expansion of End-User Controls to Cover Affiliates of Certain Listed Entities" interim final rule (IFR) that went into effect September 29, 2025, is now suspended until November 10, 2026.
The Affiliates Rule was issued by BIS to amend the Export Administration Regulations (EAR) to address a loophole that allowed foreign companies to circumvent export restrictions. This change also brought the EAR into alignment with the Office of Foreign Assets Control's (OFAC's) 50 percent rule. Under the Affiliates Rule, any entity that is at least 50 percent owned by one or more entities on the Entity List or MEU List will itself automatically be subject to Entity List or MEU List restrictions, while previously only entities explicitly listed on the Entity List or MEU List were subject. The Affiliates Rule also applies to ownership by certain entities on the Specially Designated Nationals and Blocked Persons List (SDN List). A full summary of the Affiliates Rule and the additional due diligence obligations it invokes can be found in our October 9 Insight.
Entity List restrictions remain in place, and exporters, reporters, and transferors of U.S.-origin and/or EAR-controlled items are expected to perform the necessary due diligence to remain compliant. When the Affiliates Rule goes back into effect next year, these due diligence efforts will need to be adjusted accordingly.
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