• Key takeaway #1: The U.S.-China trade truce has been extended through January 10, 2027, and the Bureau of Industry and Security’s (BIS’s) suspension of the Affiliates Rule will be extended accordingly.
• Key takeaway #2: The Affiliates Rule, issued as an Interim Final Rule on September 29, 2025, expanded U.S. export restrictions by subjecting any non-U.S. entity owned 50% or more, directly or indirectly, by one or more parties on the Entity List, Military End-User (MEU) List, or certain Specially Designated Nationals and Blocked Persons (SDN List) to the same license requirements as the listed parent.
• Key takeaway #3: While the suspension delays immediate compliance obligations, the rule has not been repealed. Companies that have not yet used the past year to build out Affiliates Rule-ready compliance programs should consider doing so before the suspension potentially expires.

What Happened? 

On September 24, 2026, Treasury Secretary Scott Bessent announced that the United States and China agreed to extend their trade truce through January 10, 2027, two months beyond the original timeline established last November. The extension correspondingly pushes back the effective date of the BIS Affiliates Rule, which had been scheduled to go back into effect on November 9, 2026. As of the date of this writing, BIS has not yet published a Federal Register notice formally extending the suspension by two months.

The original truce was reached at the Asia-Pacific Economic Cooperation (APEC) summit in Busan, South Korea on October 30, 2025, with BIS formally publishing a one-year suspension of the Affiliates Rule on November 10, 2025. Under the deal, the U.S. suspended the Affiliates Rule in exchange for Beijing suspending its export restrictions on rare earth minerals.

 A quick refresher on the Affiliates Rule:

What Is the Scope of the Affiliates Rule?

• Summary: The Affiliates Rule expanded U.S. export restrictions under the Export Administration Regulations (EAR) to cover foreign affiliates owned 50% or more (directly or indirectly) by one or more entities on the Entity List, MEU List, or certain SDN designees (collectively, “covered-list parties”).

Key features include:

• Rule of Most Restrictiveness: Where multiple listed entities together own 50% or more of an affiliate, the most restrictive license requirements of any owner apply, even if that owner holds the smaller stake. If any owner is subject to a Foreign Direct Product Rule (FDPR), the FDPR applies to the affiliate as well.
• SDN Coverage: The Affiliates Rule applies to SDNs identified under §744.8 of the EAR, including those designated pursuant to Belarus, Russia, WMD, terrorism, narcotic, and criminal network sanctions programs, to better prevent diversion and align EAR restrictions with corresponding Office of Foreign Assets Control (OFAC) restrictions.
• Affirmative Duty/Red Flag 29: BIS added Red Flag 29, requiring that if an exporter has “knowledge” that a foreign entity is partially owned by a covered-list party but the ownership percentage is unknown, the exporter must resolve the red flag through additional due diligence or apply for a BIS license.
• For background on the Affiliates Rule, see our prior client alert here.

What Is the Rationale for the Rule?

BIS explained that the Affiliates Rule was intended to close loopholes allowing restricted parties to operate through “legally distinct” foreign affiliates and subsidiaries. The rule more closely aligns the BIS ownership standard with the traditional OFAC standard for SDN-equivalent restrictions and is consistent with recent BIS enforcement actions holding parties accountable for inadequate due diligence where diversion risks were realized.

What Are the Implications for Exporters?

While the suspension is not a repeal, companies should not treat the extension as a reason to delay compliance preparations further. The Affiliates Rule has been suspended for nearly a year, and companies that have not already begun updating their due diligence procedures, ownership verification protocols, end-user certificates, and contractual provisions should do so now. The Affiliates Rule’s regulatory text and reimposition mechanism remain in place, and the additional two months of runway should not be mistaken for a signal that the rule is going away. A formal BIS Federal Register notice is still required to extend the regulatory effective date, and practitioners should watch for that notice in the coming weeks.

Crowell & Moring will continue to monitor the Affiliates Rule and related U.S.-China trade developments.