The measures are part of a broader effort to enhance licensing requirements, tighten scrutiny of exports, and monitor companies involved in sensitive sectors.

The rules target the entity list and the military end-user list, standardizing US sanctions enforcement and preventing companies from circumventing restrictions through restructuring.

The US Commerce Department has expanded its Entity List to automatically include subsidiaries owned 50% or more by listed companies, aiming to tighten controls on exports to China and other countries.

This new regulation is designed to prevent the indirect transfer of sensitive technology and materials, aligning with similar controls like the '50% rule' used by OFAC.

The expansion significantly increases the number of companies subject to export controls, potentially disrupting supply chains and complicating compliance for US exporters.

The move could bring thousands of subsidiaries in nearly 100 countries into US export control scrutiny, especially in trade hubs like Europe, Singapore, Japan, and Australia.

While some transactions may be permitted for 60 days, the new rules are expected to disrupt global supply chains and increase regulatory uncertainty for companies.

Companies seeking to continue business with restricted Chinese firms can apply for licenses, with a 60-day window for temporary general licenses to adjust compliance.

Industry experts warn that the new subsidiary restrictions will complicate compliance processes, leading to delays and enforcement challenges.

Currently, about 1,100 Chinese companies are on the Entity List, with a total of approximately 3,400 global parties affected, reflecting US security and foreign policy priorities.

The expansion follows recent US-China tensions, including the TikTok agreement, and comes amid ongoing trade disputes and US efforts to restrict Chinese technological advancements.

China's Commerce Ministry has strongly opposed the US expansion, condemning it as wrongful and warning it will increase international friction and disrupt global supply chains.