US Pauses Crackdown on Blacklisted Chinese Firms
Delay in Affiliates Rule Offers Reprieve for Tech Exporters
Key Takeaways:
- The Trump administration suspended for one year a U.S. export control rule targeting companies majority-backed by blacklisted firms, fulfilling a concession from the latest U.S.-China trade truce.
- The pause, effective until early Nov. 2026, aims to ease tensions after Beijing criticized the rule and agreed to delay its own rare-earth export restrictions by 12 months.
- The Commerce Department’s Bureau of Industry and Security said it will reassess the rule over the next year before a planned second phase that could reignite friction with China.
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The Trump administration has cemented one of its key concessions from the latestU.S.-China trade truceby formally delaying an export control rule designed to crack down on shipments to companies that are majority-backed by blacklisted firms.
The so-called affiliates rule,enactedat the end of September, has been suspended for one year, according to a Nov. 10in the Federal Register. Halting the measure signals the administration’s intent to follow through onmade with China following a meeting last month between Presidents Donald Trump and Xi Jinping aimed at easing trade tensions between the world’s largest economies.
For companies that make technology subject to Commerce Department licensing,the widely expected pauseoffers a welcome reprieve from a policy they viewed as a massive compliance headache. The suspension is set to end in early November 2026, and export control officials estimate the one-year delay will result in 245 fewer license applications.
The measure sought to prevent sanctioned companies, such as Huawei Technologies Co., from using subsidiaries to access restricted American goods. Its enactment drew a sharp rebuke from Beijing, which called the move “extremely egregious” and imposed its own sweeping export controls on rare-earth minerals in reprisal. In exchange for the U.S. pausing the affiliates rule, China has agreed to delay by 12 months an expansion of its restrictions on rare-earth minerals that had threatened to roil global supply chains.
The rule’s ripple effects were highlighted by the recent drama surrounding Nexperia. The Netherlands-based chipmaker faced scrutiny from the Dutch government over its majority ownership by Wingtech Technology Co., a Chinese venture under U.S. sanctions. In September, Dutch officials sought to assert control over Nexperia, prompting China to block exports of chips from the company’s Chinese facilities. Both sides are backing down now in the wake of the U.S.-China trade truce.
The Bureau of Industry and Security, a Commerce Department office that oversees U.S. export controls, set the affiliates rule in motion just before a government shutdown. While the measure didn’t come as a surprise to industry players, it would have forced a major overhaul of their customer screening procedures.
In its filing Nov. 10, BIS specified a “second phase” for the affiliates rule that would begin once the delay concludes next year. That risks touching off a new round of tensions with Beijing absent another pause. Over the next year, BIS said it will “continue to evaluate” the national security and foreign policy interests related to subsidiaries of listed entities.
Those who supported the rule argued that it would help solve a whack-a-mole national security problem created by restricted Chinese firms forming subsidiaries to evade export controls. The rule also would have synced export control enforcement with the way the Treasury Department enforces sanctions.
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