In a significant move to de-escalate trade tensions, the United States and China have mutually agreed to suspend recently announced export control measures on lithium batteries and related materials for a period of one year. This consensus was reached following high-level economic and trade consultations held in Kuala Lumpur on October 25-26.
The U.S. side will suspend the implementation of its stringent "50% Penetration Rule" on export controls, which was initially announced on September 29. This rule had drawn strong criticism for its potential to severely restrict technology flows. In a reciprocal gesture, China will suspend its planned export controls on high-performance lithium-ion batteries, key manufacturing equipment, and critical anode and cathode materials, which were scheduled to take effect in November 2025.
This one-year pause provides a crucial breathing space for global battery manufacturers and electric vehicle producers, who rely on deeply integrated Sino-U.S. supply chains. The decision prevents an immediate disruption in the supply of essential components, thereby offering stability to the rapidly growing global clean energy sector. Industry analysts view this as a positive, albeit temporary, step that allows both nations and the industry time to negotiate a more permanent solution.
The global push for electrification and renewable energy storage is heavily dependent on a stable supply of advanced lithium batteries. This temporary agreement helps avert a potential supply shock that could have slowed down the adoption of electric vehicles and the build-out of energy storage infrastructure worldwide. Stakeholders across the industry are encouraged to use this window to strengthen supply chain resilience and diversify their sourcing strategies.