The Chinese government recently put a tax on Japanese imports of a chemical key to producing computer chips. The Chinese government claims that Japan has violated dumping rules and is now requiring importers to place a 99.2% cash deposit on all imports of the chemical DCS. The Chinese government says that the import tax is only temporary until the investigation on the dumping violations is finished. Japanese government officials and major producers of DCS are now looking at the supply chain and finance impact of this. All of this is coming after months of political tension between China and Japan after Japan warned that they would intervene if China takes military action against Taiwan, another key country in the computer chip supply chain.
This article demonstrates perfectly how major powers like China can use targeted trade restrictions to pressure political rivals like Japan. It also shows the vulnerability of the supply chain especially in the case of something like computer chips, where dependence on certain materials means that any trade disruptions can stall the whole production process. We also see how diplomatic disagreements, in this article over Taiwan, can quickly escalate into economic retaliation.
The tariffs from China will most likely lead to Japan searching for other export markets for DCS or to look into working more heavily with domestic tech companies to avoid economic pressure from the Chinese government. China will also probably continue to leverage trade regulations to signal economic power in response to foreign policy. This will also prompt the global tech industry to search for ways to ensure the computer chip supply chain will remain stable in order to make sure electronics can continue to be manufactured.
This is a perfect example of China using hard power, they used economic tools and trade restrictions to exert pressure on the Japanese government in order to defend their national interest. This also is an example of bilateralism demonstrated through economic friction and political negotiations taking place between two sovereign nations.