US and China export controls: when they reach a buyer

Two systems, one shipment

A buyer sourcing motors from Zhejiang is not an exporter, is usually not American, and has never read the Export Administration Regulations. All three facts are true and none of them is protective. Export control attaches to the item and to the end user, not to the passport of the company arranging the freight.

So there are two questions, and they are independent of each other:

• Does anything in this product carry US jurisdiction with it? If it does, a US agency has a say in where it goes next, wherever it was made.
• Does anything in it need a Chinese licence before it leaves China? If it does, the lead time your supplier quoted is probably the manufacturing time, not the shipping date.

How US rules reach non-US goods

Three mechanisms do almost all of the work. They are worth knowing by name, because the answer to “are we exposed?” is always one of them.

• The de minimis rule. A foreign-made product is subject to the EAR if its controlled US-origin content exceeds a percentage of fair market value — 25% for most destinations, China included, and 10% for Iran, North Korea, Cuba and Syria. The test is set out at 15 CFR §734.4. A camera assembled in Sweden from US sensor parts can be a US-controlled item; so can a module built in Shenzhen.
• The Foreign Direct Product Rule. Content percentage is irrelevant here. An item made outside the United States can be subject to the EAR because it is the direct product of US technology or software, or because the plant that made it is. This is the rule that catches consumer components: it is how German-made sensors sold to an Entity-Listed customer became a US enforcement matter.
• The Entity List. For many listed parties the licence requirement covers any item subject to the EAR — including EAR99 items, and including transfers that happen entirely inside China.

One disambiguation, because the same two words describe two unrelated rules. The customs de minimis is a value threshold below which an import clears without duty — covered in is de minimis still available for imports from China? The EAR de minimis is a content percentage that decides whose permission you need to ship at all. One changes what you pay at the border. The other changes whether the shipment is lawful.

What the 2026 penalties punished

Four settlements were announced in the first half of 2026. Read together they are more instructive than any guidance note, because they show which ordinary decisions produce liability.

Three readings matter more than the numbers.

• None of the four was a shipment leaving the United States. One moved goods within China; one shipped from South Korea; one from Sweden; one from Germany. Two of the four companies are German. “We are not a US exporter” did not describe a defence in any of them.
• Voluntary disclosure mitigated, but did not excuse. Bosch, Teledyne FLIR and Exyte all came to BIS themselves and were penalised anyway — Bosch to the tune of US$36m. Disclosure is still worth making; it is not a reason to assume a small problem stays small.
• The two recurring failures are mundane. Getting the US content percentage wrong, and not knowing who the end user actually is. Neither requires an exotic product. Teledyne’s is the sharpest illustration: the value was engineered towards the threshold rather than measured against it, and BIS treated the arrangement as an impermissible calculation rather than a clever one.

What China licences today

The Chinese framework is easier to state than most coverage suggests. The Export Control Law has been in force since 1 December 2020. The Regulations on Export Control of Dual-Use Items — State Council Order No. 792, effective 1 December 2024 — consolidated the licensing machinery into one instrument. What is actually controlled is published annually: the 2026 catalogue was issued as Announcement No. 91 of 2025 and took effect on 1 January 2026.

The confusion is not about the framework. It is that a large package of new controls was announced in October 2025 and then suspended before most of it ever operated — and a great deal of writing still describes the suspended version as current.

The Chinese rule aimed at you

Almost everything above binds your supplier. One thing binds you, and it gets very little English-language attention.

China maintains a Control List (管控名单) and a Watch List (关注名单) of foreign end users under the Export Control Law. For a party on the Control List, Chinese exporters may not supply dual-use items — and, in the language of the announcements themselves, overseas organisations and individuals are prohibited from transferring or providing China-origin dual-use items to those parties, with any ongoing activity to stop immediately. The Watch List is softer: no general licences and no simplified registration, and single-item applications require a risk assessment and a written end-use commitment.

The lists are being used. MOFCOM Announcements Nos. 11 and 12 of 2026, both dated 24 February 2026, placed 20 Japanese entities on the Control List and 20 on the Watch List; a further 20 and 20 followed on 29 June 2026. An earlier announcement in January 2026 had already tightened dual-use exports to Japanese military end users. This is the mirror image of the US Entity List — an obligation addressed directly to non-Chinese companies — and unlike most of the rare-earth package, it is not suspended.

For most buyers this is background. It stops being background the moment you resell, drop-ship or consign China-origin components onward, because then the destination is yours to know rather than your supplier’s.

What is proportionate to do

None of this needs a compliance department. It needs two lists, five questions and three dates.

• List the inputs, not the products. Which of your goods contain magnets, batteries, graphite anode material, specialty alloys, sensors or optics? That list is short, it rarely changes, and it is the whole of your Chinese-side exposure.
• List the jurisdictions your components carry. For anything with US-origin parts, US design or US-derived process technology, the question is not where it was assembled but whose rules travel with it. If you cannot answer, the supplier usually can — ask in writing.
• Screen the customer, not only the supplier. Both governments now run end-user lists, and both reach parties well beyond their own borders. Screening is free and takes minutes; two of the 2026 penalties are, at heart, failures to do it.
• Ask the five licence questions before the deposit moves. Does anything here need a licence; have you obtained it before, for this item and this destination; what end-use documents do you need from me; what is your lead time including licensing; and what happens to my deposit if a licence is refused? Settle the last one in the contract, not in an email after a refusal.
• Keep the answers in the supplier file, dated. A licence question answered in a WeChat message nobody can find is not evidence. See what supplier documents actually prove, and what China’s counter-sanctions rules changed about how you may collect them.

Three dates belong in the calendar. 10 November 2026, when China’s October 2025 package resumes and the US Affiliates Rule reimposes together. 27 November 2026, when the gallium, germanium, antimony and superhard-materials measure resumes. And 1 January each year, when China’s dual-use catalogue is replaced — the quiet one, because a product that needed no licence in December can need one in January without any announcement aimed at your industry.

Both systems are moving, and both have been suspended and restored inside a single twelve-month period. Treat any summary — this one included — as orientation with a date attached, and confirm current scope against the agencies’ own announcements before a shipment depends on it.

Quick FAQ

Am I subject to US export controls if I am not a US company?

You can be. The Export Administration Regulations attach to the item, not to the nationality of the company moving it. A foreign-made good is subject to the EAR if its controlled US-origin content exceeds the de minimis threshold — 25% by value for most destinations, including China — or if it is a foreign direct product of US technology or software. Of the four largest BIS penalties announced in 2026, two were against German companies and none was for a shipment that left the United States.

Does EAR99 mean no export licence is needed?

No. EAR99 describes an item that is subject to the EAR but not listed on the Commerce Control List. It is a classification, not an exemption. Where the customer is on the Entity List, a licence can be required for any item subject to the EAR, EAR99 included. On 7 January 2026 BIS penalised Exyte Management GmbH US$1.5m over 884 EAR99 items — flowmeters, pressure transmitters, a programmable logic controller and voltage-sag protectors — transferred inside China to an Entity-Listed customer.

Is the 25% de minimis rule the same as the $800 de minimis for imports?

No, and confusing them is common. The customs de minimis is a value threshold below which an import enters without duty. The EAR de minimis at 15 CFR §734.4 is a percentage: how much controlled US-origin content, by value, a foreign-made product may contain before US export rules follow it around the world. One decides what you pay at the border; the other decides whose permission you need to ship at all.

Does my Chinese supplier need an export licence for magnets?

Possibly, and this is the control most likely to reach an ordinary product. MOFCOM Announcement No. 18 of 2025, in force since April 2025, requires a licence for seven medium and heavy rare earths — samarium, gadolinium, terbium, dysprosium, lutetium, scandium and yttrium — together with related alloys, oxides, compounds and permanent magnets. It was not part of the November 2025 suspension and has never been paused. Motors, speakers, headphones, power tools and e-bikes routinely contain the magnets it covers.

What happens on 10 November 2026?

Two suspensions lapse on the same day. China’s Announcement No. 70 of 2025 paused six export-control announcements issued on 9 October 2025 — including the rule requiring a Chinese licence for foreign-made goods containing 0.1% or more Chinese-origin rare earth by value — until 10 November 2026. The US suspension of the BIS Affiliates Rule, which extends Entity List restrictions to subsidiaries that are 50% or more owned by listed parties, reimposes on the same date absent further action. A third date follows: the suspension of the gallium, germanium, antimony and superhard-materials measure runs to 27 November 2026.

What should I ask a supplier before paying a deposit?

Five things, in writing: does any component or material in this product need an export licence; have you obtained that licence before, for this item, to this destination; what end-use documentation do you need from me; what is your lead time including licensing rather than excluding it; and what happens to my deposit if a licence is refused. The last one is the question buyers skip and later regret.