China has halted shipments of crucial minerals to Japan, affecting dysprosium, terbium, yttrium oxide, and gallium. The embargo, which began in January 2026, echoes a similar crisis from 2010.
Nomura Research Institute estimates the three-month halt could cost Japanese businesses approximately 660 billion yen ($4.2 billion), impacting Japan’s GDP by 0.11%. Japan relies on China for 60 to 70% of its critical mineral imports, influencing sectors like automotive, electronics, semiconductor, and defense.
Shipments fell dramatically from December 2025 through May 2026, with bureaucratic delays compounding the situation. In 2010, a similar embargo raised prices dramatically and disrupted production for manufacturers like Toshiba and Honda.
The current trade tension is fueled by Prime Minister Sanae Takaichi’s comments at the G7 summit on June 16, linking a potential Chinese attack on Taiwan to Japan's security concerns. Japan seeks to diversify mineral sources amid reliance on China.
Investors should note that sectors affected include automotive, electronics, defense, and semiconductor manufacturing, all heavily dependent on restricted minerals.