US trade deal with China update: The BIS suspended the 50-percent ownership rule and the Government reduced tariffs on China

On November 1, 2025, the White House issued a fact sheet titled “President Donald J. Trump Strikes Deal on Economic and Trade Relations with China.”

This fact sheet confirmed that the United States Bureau of Industry and Security (BIS) will suspend the 50-percent ownership rule (Affiliate Rule) for one year, starting November 10, 2025.

In addition, on that date, the BIS issued a regulatory filing update that officially suspended the Affiliate Rule until November 9, 2026.

We provide key takeaways and considerations for companies below.

Background of the Affiliate Rule

The Affiliate Rule, which went into effect on September 29, 2025, extended the export licensing requirements applicable to entities on the BIS Entity List, Military End User List, and certain Specially Designated Nationals (SDNs) to affiliates majority-owned by entities on those lists. For more information, see our alert on the Affiliate Rule.

Tariff adjustments

The US has agreed to reduce the 20-percent “fentanyl tariffs,” imposed in February 2025 pursuant to the International Emergency Economic Powers Act (IEEPA) to address the fentanyl trafficking national emergency, to 10 percent, effective November 10, 2025. Further, the current 10-percent “reciprocal” IEEPA tariff rate on Chinese goods will remain in effect through November 10, 2026.

For more information, see the following Executive Orders, both signed by President Trump on November 4, 2025:

• “Modifying Reciprocal Tariff Rates Consistent with the Economic and Trade Arrangement between the United States and The People’s Republic of China”
• “Modifying Duties Addressing the Synthetic Opioid Supply Chain in The People’s Republic of China”

Additionally, the actions resulting from the Section 301 investigation into China’s targeting of the maritime, logistics, and shipbuilding sectors will be suspended for one year, starting November 10, 2025.

Lastly, the expiration of certain Section 301 tariff exclusions will be extended from November 29, 2025, to November 10, 2026.

Response from China

In return, among other things, China has agreed to halt the flow of chemical precursors used in fentanyl production to the US, including suspending shipments of designated chemicals to North America and imposing stricter global export controls on certain chemicals.

These developments follow high-level negotiations between the US and Chinese governments in South Korea in the prior weeks.

China announced its global implementation of new export controls on rare earth elements and related minerals in October 2025. Under the US and China agreement, China will issue general licenses for the export of rare earths, gallium, germanium, antimony, and graphite, effectively removing the earlier-imposed controls.

Looking ahead

Given the evolving landscape, companies are encouraged to monitor ongoing developments in this space and to consider the impact of the Affiliate Rule and/or tariff implications on operations if the suspensions are reversed.

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For more information, please contact the authors.