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. BIS has confirmed in its official guidance that the suspension is temporary and that the original provisions will be reinstated on November 10, 2026. The agency also noted that it expects a rebound in licensing volume once the rule returns, signaling that enforcement will resume in full.
Key Takeaways
- BIS, in concert with U.S.–China trade negotiations, agreed to pause full enforcement of the Affiliates Rule for 12 months.
- The effective suspension period for the Affiliates Rule spans November 10, 2025, to November 9, 2026.
- This delay gives exporters and their compliance teams breathing room to adjust/update systems, map ownership, and train teams.
- But the risk isn’t gone. The pause is not a repeal.
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 10, 2025 – November 09, 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. |
| November 10, 2026 onward | Reimposition of the Affiliates Rule provisions | With the return of ownership-based controls, expect increase in export licensing volume and renewed enforcement exposure. |
Open Question: China-Only Pause or Full-Scope Freeze?
One area of prior uncertainty—how far the pause actually extends—has now been clarified. While initial reporting, including Reuters’ readout of the announcement, framed the suspension as targeting restrictions that “make it harder for Chinese firms to use affiliates,” potentially imply a China-specific scope, the final rule issued by BIS confirms a full-scope freeze. The one-year suspension applies to all amendments introduced by the BIS 50% Affiliates Rule also called the Expansion of End-User Controls to Cover Affiliates of Certain Listed Entities rule, regardless of geography.
The original Affiliates Rule, effective September 30, 2025, was global in scope—covering exports, reexports, and in-country transfers to any entity that is majority-owned (greater than or equal to 50%) by parties on the BIS Entity List, MEU List, or OFAC-linked SDNs. The final rule now stays those provisions in their entirety until November 9, 2026, reaffirming that the pause is not limited to China-related entities but applies across all jurisdictions and sectors.
What This Means for Exporters and Importers
For U.S. exporters and compliance teams, the one-year 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. It also eases immediate pressure to manage a surge in export license applications. For global organizations, including Chinese firms, it offers a brief window to reassess ownership structures and exposure to U.S. export controls.
From a compliance standpoint, the pause also means a temporary reduction in export licensing volume, as BIS estimates approximately 245 fewer license applications will be submitted during the suspension period. However, this relief is short-lived—the rule is scheduled to be reinstated on November 10, 2026, with no indication of cancellation. As such, the burden will return, and enforcement exposure will likely increase once the rule is back in effect.
Additionally, BIS has confirmed that this action is exempt from the Administrative Procedure Act (APA), meaning no public comment or delay in effective date was required. This underscores the importance of monitoring BIS actions closely, as future changes may be implemented swiftly and without advance notice.
By staying agile and treating this pause as a strategic planning period, organizations can position themselves to respond quickly to future compliance demands.
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
- Watch for BIS guidance and updates especially as national security and foreign policy concerns influence regulations.
- Document the current regulatory status and update internal guidance accordingly.
- Review and record ownership visibility gaps and known data limitations.
- Evaluate advanced screening tools capable of detecting indirect and aggregated ownership.
- Refine escalation workflows for ambiguous or incomplete ownership disclosures.
- Strengthen recordkeeping and audit trails to demonstrate diligence should enforcement resume unexpectedly.
- Avoid dismantling or pausing ongoing compliance initiatives, especially those related to ownership screening and data integration.
- Plan for export licensing volume spikes and increased enforcement risk post-November 2026.
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.
