The 50% rule waits until January: what trade lenders should do with the time

Washington has again delayed a rule that would change how every trade-finance desk screens its counterparties. On 5 November the US Commerce Department's Bureau of Industry and Security extended the suspension of its so-called Affiliates Rule until 10 January 2027. The rule had been due to return today. The extension buys two months, not a cancellation, and the lenders who use those two months to map ownership will be in a far better position than those who wait for the next headline.

What the rule does and why it was paused

Today, US export controls bite on the names that appear on government lists, such as the Entity List and the Military End-User List. A company that is owned by a listed party but is not itself listed can, in most cases, still be supplied. The Affiliates Rule closes that gap. It extends the same licence requirements to any foreign entity owned 50% or more, directly or indirectly, individually or in aggregate, by listed parties. Reed Smith notes that it also reaches entities owned by certain parties on the Treasury's sanctions list.

The rule took effect on 29 September 2025. Within weeks it became part of the US-China trade truce reached in October 2025, and from 10 November 2025 it was suspended for one year. In September this year the two governments agreed to extend their truce through 10 January 2027. That announcement did not mention the rule by name, which left exporters and their banks unsure what would happen today. The final rule BIS issued on 5 November, set for the Federal Register on 9 November, settles it: the suspension now runs to 10 January.

Baker McKenzie's reading is the one that matters for planning. The rule is suspended, not withdrawn. BIS did not change its substance and has not yet answered the public comments it received. If the truce holds, another extension is possible. If it does not, the rule returns in January, and Reed Smith points out that China's broader rare earth export controls could take effect at the same moment.

The extension buys two months, not a cancellation, and the lenders who use those two months to map ownership will be in a far better position than those who wait for the next headline.

Why a trade-finance desk should care

Sanctions practitioners already work with a 50% test: it is how the Treasury treats companies owned by sanctioned persons. The Affiliates Rule brings the same logic into export controls, and that changes what a clean counterparty looks like.

Screening moves from names to ownership trees. A bank confirming a letter of credit for an export of machinery, chemicals or electronics checks the buyer, the consignee and the end user against the lists. Under the rule, that check is not enough. The bank also needs to know who owns those companies, including through holding structures in third countries, and whether the stakes of several listed parties add up to half.

Documents that were good can stop being good. A letter of credit opened in December for a cargo shipping in February sits across the deadline. If a party to it turns out to be majority-owned by listed entities, the exporter may need a licence it does not have, and the bank may be unable to pay or to finance. Many credits carry sanctions clauses for this reason, and ICC guidance has long warned that broad clauses undermine the certainty of payment that makes a credit worth having.

Borrowing bases can shrink overnight. A trader with a facility secured on receivables from Asian or Middle Eastern buyers may find that some of those receivables come from companies the lender can no longer treat as eligible. A hypothetical example: if 15% of a borrowing base sits with buyers whose shareholders include listed parties, availability could fall by that much in January, at the point in the year when working capital is usually tightest.

Ownership data is the bottleneck. Registries in many jurisdictions are incomplete, shareholdings change, and nominee structures are common. Building the tree takes weeks, not days, which is why the two-month window matters.

What a careful desk does now

The sensible response is to treat 10 January as a live date. That means finding the counterparties most likely to be affected, asking them for ownership information while the request is routine rather than urgent, and agreeing in advance what happens to a transaction if the rule returns mid-shipment. It also means reading the sanctions and export-control language in credits and facility agreements issued in the next eight weeks, before those documents straddle the deadline.

Questions to ask

Which counterparties in the portfolio deal in controlled goods, and do we know who owns them down to 50%?
Which credits, guarantees and receivables will still be outstanding on 10 January 2027?
What do our sanctions clauses say, and would a beneficiary accept them as written?
How much of each borrowing base would become ineligible if the rule returned, and is there headroom?
Who in the business decides, before January, whether a straddling transaction goes ahead?

What the rule does and why it was paused

Why a trade-finance desk should care

What a careful desk does now

Questions to ask

Sources