• The US broadened its export blacklist, impacting Chinese companies significantly.
• New regulations target subsidiaries at least 50% owned by firms on the Entity List.
• China's Commerce Ministry condemned the move, stating it disrupts global supply chains.
• Thousands of subsidiaries worldwide could fall under stricter US export controls.
• The rule is expected to affect sectors like semiconductors, aircraft, and medical equipment.

The United States has expanded its export blacklist, implementing a new rule that automatically includes subsidiaries of blacklisted companies, particularly those from China. This change comes as a part of the US efforts to tighten control over chipmaking equipment and related technologies to curb workarounds used by foreign entities. Under these new regulations, subsidiaries owned at least 50% by blacklisted firms will now require licensing to receive US goods and services, significantly increasing the bureaucratic burden for exporters, according to Indiatimes, Reuters, and Channel News Asia.

China's Commerce Ministry has issued a strong condemnation of the US's decision, labeling it "extremely egregious." The ministry argues that the actions severely infringe upon the legitimate rights of affected enterprises and would disrupt the order of international trade. This escalation in trade tension is occurring amid ongoing talks between the US and China, marking a significant departure from recent US moves to ease restrictions on certain advanced AI technologies, according to Indiatimes and Reuters.

The newly established regulations are expected to create significant disruptions in international supply chains, impacting industries such as semiconductors, aircraft, and medical equipment. Many Chinese companies, including tech giants like Huawei and DJI, already have their subsidiaries under scrutiny, with the new rules significantly increasing licensing requirements. Analysts anticipate that this extensive crackdown could potentially bring thousands of previously "hidden" subsidiaries into the regulatory focus, further complicating compliance for global companies involved in these sectors, according to Reuters and Channel News Asia.

The Department of Commerce emphasized that this new rule aims to close loopholes that allowed blacklisted firms to bypass restrictions through subsidiaries. However, experts suggest that while it may hinder some operations, companies may find ways to restructure to evade such limitations, indicating that enforcement will remain a challenge, according to Channel News Asia.