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Now Japan looks to use trade as a tool of policy

Relief is sweeping the financial world after the US and China agreed to restart trade talks, calming fears of a full-blown trade war. Little is known as to exactly how Beijing and Washington will resolve their trade conflict, but any thawing in relations must be good.

Trump has also relaxed some of the measures recently imposed on Huawei, by allowing US companies to sell some technology to the Chinese telecoms firm.

But, just as tensions between the US and China ‘appear’ to be easing, up pops another trade clash this time between Japan and Korea.

Japan is set to tighten curbs on exports of high-tech materials used in smartphone displays and chips to South Korea, amid a growing historic dispute over how South Koreans were forced to work for Japanese firms during the Japanese occupation of the country from 1910-45.

The move will hit South Korean tech giants, such as Samsung, SK Hynix and LG Display as the materials to be restricted include fluorinated polyimides, used in smartphone displays, as well as resist and hydrogen fluoride (HF), which is used as an etching gas to make semiconductors.

South Korea’s top memory chipmakers said they would have to try to build stockpiles, adding that they rely on Japan for more than 70 percent of their resists and etching gas.

This is bad news for South Korean companies which are heavily reliant on Japanese products, but could also spell trouble for Japan further down the road, according to analysts.

South Korean companies facing further restrictions could end up rethinking their supply chains and diversify sources. At present, Japanese products are chosen for their high quality, but could be swapped out for US or Chinese made components.

But not only that. This move could result in a hike in prices for parts and components, that will not only hit Korean companies but their customers around the world.

Neil Tyler

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