The U.S. Commerce Department’s Bureau of Industry and Security (BIS) has issued a final rule which will suspend BIS’s recently enacted Affiliates Rule effective as of November 10, 2025 and continuing through November 9, 2026.  The Trump Administration committed to make this change as part of its Deal on Economic and Trade Relations with China, which was announced on November 1, 2025.

The “Affiliates Rule” refers to BIS’s interim final rule “Expansion of End-User Controls to Cover Affiliates of Certain Listed Entities” which first took effect on September 29, 2025 and automatically extended Entity List export licensing requirements under the U.S. Export Administration Regulations (EAR) to any entity that is at least 50 percent owned by one or more entities listed on the Entity List. The Affiliates Rule also applied similar restrictions to entities at least 50 percent owned by parties listed on the EAR’s Military End User List (MEU List) or the Specially Designated Nationals and Blocked Persons List (SDN List) maintained by the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC).  The Affiliates Rule also added a new Red Flag 29 to the EAR which requires exporters, reexporters and transferors to obtain licensing from BIS when they have “knowledge” (as such term is defined in the EAR) that a party to their transaction has one or more owners listed on the Entity List or MEU List but cannot determine that percentage of ownership.  The Affiliates Rule is based on OFAC’s “50 percent rule” which extends blocking sanctions under OFAC’s SDN List to entities which are owned 50 percent or more, directly or indirectly, individually or in aggregate, by one or more persons listed on the SDN List.   

The final rule indicates that BIS will implement the suspension in two phases. The first phase, effective on November 10, 2025, and ending November 9, 2026, is a one-year suspension of the Affiliates Rule. The final rule will stay the effective date for all EAR amendments associated with the Affiliates Rule during this first phase.  In the second phase of this final rule, effective November 10, 2026 and extending indefinitely, the changes included in the Affiliates Rule that are stayed in the first stage will be added back into the EAR. BIS has stated that “During the first phase of this final rule, BIS will continue to evaluate U.S. national security and foreign policy interests related to these non-listed foreign affiliates of listed entities.”  Therefore, it is possible that BIS could still take action during the first phase to individually add subsidiaries of existing Entity List or MEU List parent companies to the Entity Lit or MEU List if BIS views those subsidiaries as presenting a threat to U.S. interests.

The Husch Blackwell team continues to monitor developments and will provide additional updates as they arise.