The Trump administration sought to close a potential loophole in its global technology restrictions on Monday by expanding the range of companies that are subject to sanctions when included on a government “entity list.”

The change will allow the United States to sweep in any majority-owned subsidiary of a company that’s on the entity list. In the past, an entity listing applied only to the corporation specifically named by the U.S. government, not other companies related to it. Exporters are prohibited from sending certain technology to companies and organizations on the list unless they first obtain a special license from the government.

Some targets of the entity list have easily sidestepped the impact of U.S. sanctions by shifting business to their subsidiaries instead. The rule change is aimed at cracking down on that practice.

Now, any subsidiary that is more than 50 percent owned by a parent company on the entity list will have the same restrictions automatically apply, a move that could capture tens of thousands of additional companies.

While the Commerce Department does not publish the total number of companies and organizations on the entity list, there are thousands of entries, some of which have numerous subsidiaries. Many of them are Chinese or Russian owned.

Kit Conklin, the global head of risk and compliance for Exiger, a data analytics firm, called the change “a significant hardening of U.S. economic security policy.”

He said that China had “long exploited this loophole” and that the rule targeted “billions of dollars worth of supply chains.”

Companies have protested the rule, complaining that it will require them to perform onerous due diligence to identify all the subsidiaries of entity-listed companies. But proponents say the change will capture more companies that have tried to dodge American export restrictions.

In its release, the Bureau of Industry and Security, a division of the Commerce Department in charge of entity listings, said that it was “concerned that the old approach can enable diversionary schemes, such as the creation of new foreign companies to evade entity list restrictions.”

The creation of such companies could allow listed entities to deceive American companies into providing them with restricted items, the release said, and has required the bureau to expend significant resources to identify and place new companies on the entity list.

Thea Kendler, a partner at the law firm Mayer Brown who was an export control officer in the Biden administration, said that U.S. sellers would now be expected to screen foreign companies buying most commercial items. She called the rule “a global compliance iceberg.”

“It will predominantly affect sales to China, to privately-held businesses and by smaller companies that don’t have in-house sanctions officials,” she said. “Shipments will slow while companies endeavor to meet new due diligence standards.”

The rule change will also apply to entities on a U.S. government list of “military end users,” and certain other sanctioned parties. It mirrors a practice already long used by the Treasury Department for its financial sanctions.

The rule goes into effect for some companies on Monday, and the rest will be subject to it in 60 days.

Recent administrations have greatly expanded the use of the U.S. entity list.

Emily Kilcrease, a senior fellow at the Center for a New American Security, a Washington think tank, said additions from China and Russia had driven the increase in entity listings over the past six years, as the United States toughened its technology restrictions on China and sanctioned Russia after the invasion of Ukraine. A total of 1,661 entities has been added to the list since 2022, according to the think tank’s tracking.

But some targets of the entity list have easily sidestepped the impact of U.S. sanctions by shifting business to their subsidiaries instead.

One of those, Inspur Group, a Chinese tech firm that was added to the entity list in 2023 for developing supercomputers for the Chinese military.

U.S. companies briefly paused doing business with the firm after the Biden administration put Inspur’s parent company on the entity list. But they soon resumed doing business with Inspur’s subsidiaries. In March, the Trump administration added more subsidiaries of Inspur to the entity list.

Critics have said that companies could easily avoid the Trump administration’s latest rule change. If a subsidiary’s ownership is changed so that the parent company owns less than 50 percent of its shares, the entity listing will not apply to it.

The rule change could also add more tension to continuing negotiations between the United States and China, the target of hundreds of the U.S. government’s more recent entity listings.

In a statement on Monday, a spokesperson for China’s Ministry of Commerce called the move “extremely egregious” and said that Beijing would take “necessary measures” to safeguard the rights and interests of Chinese companies.

On Sept. 12, the United States added 32 new companies and organizations to the entity list, including Chinese chipmakers and biotech companies, as well as firms in India, Iran, Singapore and Turkey.

The Chinese government promptly retaliated with several measures, including accusing Nvidia, the world’s biggest maker of artificial intelligence chips, on Sept. 15 of violating China’s antimonopoly law.