U.S. Pauses BIS “50% Affiliates Rule” for One Year: What It Means for Exporters, Importers, and Compliance Teams

On October 30, 2025, following a series of high-level negotiations aimed at easing trade tensions, the U.S. announced a one-year pause on the newly adopted Bureau of Industry and Security (BIS) 50% Affiliates Rule—a regulation that expands export control restrictions to any entity 50% or more owned (directly or indirectly, individually or in the aggregate) by parties on the Entity List, Military End User (MEU) List, or certain Specially Designated Nationals (SDNs) under Export Administration Regulations (EAR) §744.8(a)(1).

The decision emerged as part of a broader thaw in U.S.–China trade relations. In what U.S. Treasury Secretary Scott Bessent described as “an opportunity to reset the relationship between the U.S. and China,” Washington agreed to suspend the rule’s enforcement for one year in return for Beijing’s one-year suspension of its rare earth export licensing regime. As Bessent explained, “We are going to be suspending that [BIS 50% rule] for a year in return for the suspension on the rare earth licensing regime.”

But for exporters, importers, and compliance teams, this “cooling-off period” doesn’t mean the heat is gone. The pause provides breathing room, yes—but also raises questions about what comes next. The rule hasn’t disappeared; it’s only stepped into the shadows, for now.

Quick refresher: What the BIS 50% Affiliates Rule Was Designed to Do

BIS issued the interim final rule (IFR), effective September 29, 2025, to prevent entities on denied parties lists from routing transactions through majority-owned subsidiaries, closing a well-known loophole.

The framework mirrors the Treasury Department’s longstanding Office of Foreign Assets Control (OFAC) “50 Percent Rule”. That alignment was deliberate, and it raised the bar for due diligence across complex corporate structures.

Why the BIS 50% Rule Was Paused

Behind the scenes, the decision to pause enforcement appears to be as much a diplomatic gesture as a regulatory adjustment. The Affiliates Rule carried outsized implications for China, which became a major focal point of negotiation during recent trade talks.

According to recent estimates, the number of Chinese entities blacklisted under the rule could have soared from roughly 1,300 currently to more than 20,000—a 15-fold expansion in the “blast radius” of firms off-limits to U.S. exports.

Such a sweeping impact risked disrupting bilateral trade in key technology, manufacturing, and logistics sectors, while also forcing U.S. companies to re-evaluate thousands of supplier and partner relationships overnight.

In parallel, China agreed to pause its planned export controls on rare earth minerals—a critical concession given how vital those materials are to U.S. defense and clean energy industries.

Table 1. BIS 50% Evolution Timeline: From Announcement to Pause

Date	Event	Significance
July 11, 2025	BIS announces the “50% Affiliates Rule” as part of a broader export control modernization initiative.	Expands restrictions to cover affiliates majority-owned by parties on U.S. restricted lists.
September 29, 2025	The interim final rule enters into effect, catching many compliance teams unprepared.	Global scope and Red Flag 29 mandate introduces significant data and operational complexity.
October 26–30, 2025	High-level U.S.–China trade talks.	Both sides seek to stabilize trade relations; discussions include export controls.
October 30, 2025	U.S. announces a one-year suspension of the Affiliates Rule following trade negotiations.	Part of a reciprocal agreement—China pauses its export controls on rare earth minerals.
November 2025 – October 2026	Pause period in effect. BIS expected to issue clarifications or amendments before reinstatement.	Compliance teams have a short window to adapt systems and ownership data tracing.

Open Question: China-Only Pause or Full-Scope Freeze?

One area of uncertainty remains: how far the pause actually extends. Reuters’ readout of the announcement frames the suspension as targeting restrictions that “make it harder for Chinese firms to use affiliates”—language that could imply a China-specific scope. However, the underlying BIS 50% Affiliates Rule, which took effect in late September, is global in scope. The rule covers exports, reexports, and in-country transfers, extending export controls to any entity majority-owned by listed parties on the Entity List, MEU List, OFAC-linked SDNs.

What This Means for Exporters and Importers

For U.S. exporters, the pause provides temporary relief from what would have been a major due diligence and data-mapping lift—particularly for those still modernizing screening systems or integrating ownership data across multiple business units. For Chinese firms, it offers a brief window to reassess ownership structures and exposure to U.S. export controls.

However, the situation remains fluid. With ambiguity around the scope of the pause, companies should avoid making structural or procedural changes until BIS issues an official Federal Register notice or formal guidance. Document the current announcement but wait for confirmation before retooling compliance programs. If the suspension is limited to China-linked entities, enforcement could still apply to affiliates tied to other sanctioned jurisdictions such as Russia, Iran, or North Korea.

Recommended approach:

Until BIS clarification is published, compliance teams should remain flexible and prepare for multiple outcomes:

By staying agile and implementing scenario-planning now, organizations can respond quickly once BIS defines the rule’s reach—without incurring unnecessary risk or rework.

Trade Compliance Risks That Still Remain

Even with enforcement delayed, the ground beneath exporters has shifted. The intent behind the BIS 50% Affiliates Rule remains unchanged. Its purpose—to close indirect exposure loopholes—signals the U.S. government’s ongoing commitment to tightening oversight.

For global businesses, this means the compliance landscape continues to evolve. Four key risk areas remain front and center:

1. Rising due diligence expectations

From forced labor exposure to export controls linked to national security, ownership ambiguity is now a major red flag. The principle long championed under OFAC’s 50% rule is expanding—greater transparency into ownership and supply chain relationships is no longer optional.

2. Increasing export licensing volume and complexity

BIS continues to add to the Entity List—twice in the past month alone, including new “address-only” listings. As the scope of restricted entities grows, so does the need for robust, export license workflows capable of managing complex determinations and faster license submissions.

3. Heightened documentation and audit-readiness

A compliance policy is no longer enough—proof of due diligence is the new benchmark. The ability to trace every decision, license, and screening outcome builds credibility and resilience.

4. Operational unpredictability

When business systems, shipment approvals, or partner onboarding depend on manual or disconnected controls, operational risk increases. Strengthening compliance integration across processes reduces disruption and keeps shipments moving when regulations shift again.

Practical Preparation During the Pause

In Conclusion

In a regulatory landscape where rules can appear and disappear faster than a seasonal trend, staying reactive isn’t enough. The pause of the BIS “50% Affiliates Rule” is a reminder that agility and foresight are essential.

While the rule may be on hold, the threat of enforcement hasn’t vanished. Ownership opacity, weak screening, and licensing blind spots are still big risks. Descartes’ export compliance solutions empower teams to anticipate changes, adapt quickly, and maintain confidence—whether the rules are active, paused, or evolving.