On October 20, 2025, the National Foreign Trade Council (NFTC), one of the most influential U.S. business lobby groups, formally urged the Biden administration to repeal a recently enacted export control regulation known as the “Affiliates Rule.” The NFTC’s appeal reflects growing anxiety among American exporters that the rule is already causing significant disruptions to international business and undermining U.S. supply-chain leadership in high-tech industries.
The Affiliates Rule, implemented by the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) on September 29, dramatically expands the scope of export restrictions related to the Entity List—a list of foreign entities deemed by the U.S. government to pose risks to national security or foreign policy interests. Under the new regulation, U.S. companies are prohibited from exporting goods, software, or technology not only to entities on the list, but also to any of their affiliates or subsidiaries that are 50 percent or more owned by a listed entity, even if those affiliates have not been individually designated.
Business leaders and policy experts argue that the rule is sweeping in its scope and lacks the clarity needed for effective compliance. Because many multinational companies operate with complex ownership structures, exporters now face significant burdens in determining whether a customer or supply-chain partner is indirectly controlled by a sanctioned entity. This has resulted in widespread confusion and a chilling effect on trade, particularly in sectors like semiconductors, aerospace, telecommunications, and industrial machinery, where cross-border business relationships are highly integrated.
The NFTC has warned that the Affiliates Rule is already producing immediate consequences. According to industry estimates cited by the group, billions of dollars in U.S. exports have been delayed, suspended, or outright canceled in the weeks following the rule’s enactment. Many companies have been forced to reassess their international operations, putting key shipments on hold while they await guidance or licensing approvals from BIS. Some firms are also reviewing whether to exit certain markets altogether to avoid the legal and financial risks associated with potential non-compliance.
The business community’s concerns are not limited to the financial losses. At the heart of the NFTC’s argument is the broader strategic risk that U.S. firms could be pushed out of global supply chains at a time when national policy aims to reinforce U.S. manufacturing leadership. The organization cautioned that if international companies find it too burdensome or risky to work with American suppliers, they may shift procurement and manufacturing to jurisdictions with more predictable regulatory regimes. In the long run, this could diminish U.S. influence in strategic industries and undercut the country’s export competitiveness—goals that the rule ostensibly aims to support.
Companies impacted by the rule are now being forced into complex compliance decisions. In practice, the 50 percent ownership test requires firms to analyze direct and indirect ownership stakes, including across parent companies, joint ventures, and investment arms. The compliance challenge is compounded by a lack of transparency in corporate ownership in many jurisdictions, meaning exporters often do not have the tools to assess risk reliably. Legal experts have noted that the Affiliates Rule places substantial investigative responsibilities on companies without offering corresponding support or information-sharing mechanisms from the government.
The Biden administration has framed the rule as a necessary step to close loopholes that allowed sensitive U.S. technologies to reach prohibited parties through nominally separate affiliates. National security officials argue that adversarial governments have used complex legal structures to circumvent export restrictions and acquire dual-use technologies through subsidiaries that previously escaped scrutiny. However, critics say the blanket approach adopted by the rule may end up harming U.S. interests more than protecting them.
At the center of the debate is the balance between economic policy and security strategy. While the U.S. seeks to protect critical technologies from misuse, many in the business community are calling for a more nuanced approach—one that targets bad actors without placing excessive burdens on compliant, law-abiding firms. The NFTC has proposed that BIS and the Commerce Department adopt a case-by-case licensing process or develop more refined criteria for assessing affiliate risk rather than relying solely on a rigid ownership threshold.
The White House has not yet publicly responded to the NFTC’s appeal. Still, the debate is expected to intensify as more companies come forward with reports of disrupted exports and reconsidered international investments. Industry groups are lobbying Congress and federal agencies for immediate relief, warning that if the current rule remains in place, it could trigger a broader re-alignment of global trade networks away from U.S. suppliers.
In conclusion, the Affiliates Rule has become a flashpoint in the ongoing struggle to reconcile national security concerns with the need to maintain a vibrant and globally competitive export economy. The NFTC’s call for a policy reversal adds urgency to a debate that could shape the future of U.S. trade and technology leadership in a multipolar economic landscape.
