U.S. Department of Commerce to Suspend Enforcement of the 50 Percent Rule for One Year

On October 30, 2025, U.S. Secretary of Treasury Scott Bessent and China’s Ministry of Commerce confirmed that the United States plans to suspend enforcement of the U.S. Department of Commerce Bureau of Industry and Security (BIS) “Affiliates Rule” for one year. As discussed in our recent Advisory, BIS Expands List-Based Controls Through Implementation of “50 Percent Rule,” the Affiliates Rule extended list-based requirements and restrictions under the Export Administration Regulations to entities that are owned 50 percent or more — directly or indirectly, individually or in aggregate — by (1) parties identified on the Entity List, Military End User List, and/or Specially Designated Nationals and Blocked Persons List and/or (2) entities that are themselves subject to those restrictions due to their ownership structure. The Affiliates Rule suspension was one of several outcomes of broader bilateral negotiations between President Trump and President Xi, which included China suspending its rare earth materials licensing scheme. Importantly, until the BIS publishes a formal notice rescinding the rule, it remains in effect. Neither Secretary Bessent nor any other U.S. official has indicated when the United States plans to formally rescind the rule.

Going forward, it is important to note that the BIS Affiliates Rule has not been permanently discarded; rather, it is set to be subject to a one-year suspension. As such, at best, the suspension will need to be re-upped in one year or the rule removed in the next, and at worst, the suspension can be lifted, and the Affiliates Rule’s restrictions reimposed at any time. Further, specifically designated entities will remain subject to applicable restrictions. Therefore, although enforcement may be paused, companies should use this time to continue assessing and insulating, where possible, their supply chains from foreign affiliates covered by the Affiliates Rule. Such proactive insulation will minimize exposure to potential future violations of the Affiliates Rule if the U.S. government were to lift the suspension and reimpose the Rule.

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© Arnold & Porter Kaye Scholer LLP 2025 All Rights Reserved. This Blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.