Expansion to Electronic Components, Batteries, Aluminum, and Food: China's Backlash Against "Economic Coercion" - Why U.S. Import Regulations Involve Japanese Companies

The trade conflict between the United States and China is once again intensifying.

On July 31, 2026, the U.S. government added 43 Chinese companies to the "Uyghur Forced Labor Prevention Act" entity list, suspecting their involvement in forced labor. The new measures will take effect on August 3, increasing the number of listed companies and organizations from 144 to 187. This is the largest addition since the system began.

In response, the Chinese government strongly opposed the U.S. claims, stating that they lack factual basis and are a "typical economic coercion" using domestic law to unilaterally sanction Chinese companies. The Chinese Ministry of Commerce has stated it will take necessary measures to protect the interests of its companies, potentially sparking new tensions in U.S.-China relations.

At first glance, this issue seems to be a problem between the U.S. market and Chinese companies. However, this measure is not a distant matter for Japanese companies either.

Even if finished products exported to the U.S. are manufactured in Japan, they could be subject to import bans if any part of the raw materials, components, or processing involves the listed companies. The real risk for Japanese companies is not whether they directly trade with Chinese companies, but whether the regulated companies or regions are involved upstream in their products.

What the Addition of 43 Companies Means

The Uyghur Forced Labor Prevention Act is a U.S. law enacted at the end of 2021 and fully implemented from June 2022.

The main feature of this law is that it presumes goods mined, produced, or manufactured in the Xinjiang Uyghur Autonomous Region, or goods involving companies listed by the U.S. government, to be "made with forced labor" by default.

Unlike the usual system where the party banning imports must prove violations, the importer must demonstrate with clear and convincing evidence that they are not connected to forced labor. If they cannot prove it, the cargo may be refused entry into the U.S. or held at customs for an extended period.

Of the 43 companies added this time, the U.S. government explained that four companies were involved in recruiting, transporting, and accepting workers, including Uyghurs, in collaboration with Xinjiang authorities.

For the remaining 41 companies, it was determined that they procure raw materials from Xinjiang or purchase materials from businesses linked to labor programs run by local governments. Two companies are listed in both categories.

Importantly, the regulation is not limited to companies based in Xinjiang. The targeted companies include those headquartered or primarily based in provinces outside Xinjiang but dealing with raw materials from Xinjiang or related companies.

In other words, the judgment that "it's safe because the factory is not in Xinjiang" does not hold.

Regulations Expanding to Batteries, Electronic Components, Power Equipment, Metals, and Food

The newly added targets are not concentrated in a specific industry.

According to reports and U.S. government announcements, the targets include companies related to lithium and battery materials, electronic components, aluminum, power equipment, solar-related materials, gold, cotton, pharmaceuticals, agricultural products, and processed foods.

For example, lithium compounds used in electric vehicles and storage batteries, aluminum electrolytic capacitors used in electronic devices and automobiles, transformers for power distribution equipment, and materials for solar panels are within the scope of regulation.

Additionally, food companies handling nuts and seeds, aluminum production companies, and mining and gold refining-related companies are also targeted.

This indicates that U.S. forced labor regulations are penetrating beyond the initially focused areas of cotton, apparel, and solar panels into a wide range of basic manufacturing materials.

What is troublesome for companies is that these materials become less visible in finished products.

Lithium is processed into battery cells, aluminum into car bodies and electronic components, gold and copper into substrates and contacts, and chemical materials into capacitors and semiconductor-related components. After passing through multiple trading and processing companies, it is not easy for finished product manufacturers to trace back to the mining or refining companies of the raw materials.

However, under U.S. regulations, the very circumstance of being "unable to trace" can itself become a significant risk.

Reasons for China's Opposition

The Chinese Ministry of Commerce has completely denied the U.S. allegations of forced labor.

China argues that there is no forced labor in Xinjiang and that the U.S. is using human rights issues as a pretext to suppress the competitiveness of Chinese companies. Furthermore, applying a country's domestic law to extraterritorial companies and trade disrupts the normal international trade order and destabilizes the global supply chain.

On the other hand, the U.S. positions its measures as necessary to prevent consumers and companies from unknowingly purchasing products linked to forced labor and to protect workers' human rights.

The claims of both countries are in direct opposition.

The United Nations Office of the High Commissioner for Human Rights has pointed out serious human rights violations in Xinjiang in past evaluation reports. Meanwhile, the Chinese government has criticized the content and methods of the reports, justifying its Xinjiang policies as counter-terrorism, vocational training, and poverty alleviation.

Therefore, it is difficult for companies to determine "which claim is correct" on their own. Nonetheless, as long as they intend to enter the U.S. market, companies must prepare evidence in accordance with U.S. law.

Practical responses are necessary, separate from ideology or political stance.

Regulations Announced Right After Dialogue

The timing of the announcement of these regulatory enhancements has drawn attention.

According to the Chinese side, the day before the announcement, Chinese Vice Premier He Lifeng and U.S. Treasury Secretary Scott Bessent, along with Trade Representative Jamison Greer, had discussions online.

Preparations for a summit meeting between the U.S. and China are said to be underway, and continued dialogue on trade, technology, and security is being explored.

The U.S. announcement of the largest-ever addition right after these discussions may have appeared to China as a "dual strategy of continuing dialogue while increasing pressure."

However, from the U.S. perspective, the enforcement of the UFLPA is in the realm of human rights issues and customs law enforcement, distinct from regular tariff negotiations. Just because U.S.-China discussions are taking place does not mean the operation will be immediately halted.

Even if a summit or trade negotiations occur in the future, it is unlikely that the 43 companies will be removed from the list in a short period. Companies seeking removal must demonstrate that they do not meet the designation criteria or have resolved the problematic relationships and undergo U.S. government review.

Japanese companies should not expect that regulations will naturally disappear if U.S.-China relations improve but should respond on the premise that regulations will be prolonged.

Three Reactions on Social Media

A review of public posts on social media reveals three main directions of reaction. However, this is an extraction of public posts and does not represent the overall public opinion in the U.S., China, or Japan.

The first reaction is one that evaluates the U.S. measures from a human rights protection perspective.

Human rights organizations and activists working on the Uyghur issue welcome the addition of the 43 companies, stating that companies should not profit from forced labor. Some posts position this measure as a "clear warning to companies" and call for broader corporate investigations and international import regulations.

In these reactions, the import ban is seen not merely as a sanction against China but as a means to change corporate procurement behavior.

The second reaction points out the impact on trade practices and corporate compliance.

Posts by experts involved in international logistics, customs, law, and human rights due diligence emphasize that simply confirming the names of targeted companies is insufficient. What is needed is evidence connecting the origin of raw materials, processing plants, refineries, component companies, trading companies, transportation records, and payment records.

In particular, U.S. customs practices emphasize not only "whether the company has a human rights policy" but also "whether the origin of the cargo can be documented." Discussions among practitioners on social media also share the view that human rights due diligence and evidence submission at customs are not the same and that both need to be established.

The third reaction views the measures as a means of economic security or U.S.-China competition.

Posts introducing statements from the Chinese government or with a pro-China tone suggest that the U.S. is using human rights as a reason to exclude China's growth industries and gain an advantage in supply chains for batteries, renewable energy, electronic components, and metals.

Given that the targets include battery materials, power equipment, electronic components, and aluminum, it is difficult to completely separate pure human rights policy from industrial competition policy.

In summary, while opinions on the measures are divided, there is a general consensus that "corporate supply chain management will become stricter than ever."

"Regulations Beyond Country of Origin" Also Apply to Japanese Companies

What Japanese companies should be most cautious about is that the UFLPA does not only target goods exported directly from China to the U.S.

Even products assembled in Japan can be subject to U.S. customs checks if they use parts or materials manufactured by targeted companies. The same applies if processed in factories in Thailand, Vietnam, Malaysia, Indonesia, Mexico, etc., and upstream connections with targeted companies are confirmed.

Consider a case where a Japanese company purchases battery materials from a Chinese trading company, processes them into battery cells at a factory in Southeast Asia, and installs them in automobiles in Japan or Mexico for export to the U.S.

Even if the final product's country of origin is not China, if U.S. customs determines there is an issue with the origin of the materials, the import of the completed vehicles or parts may be halted.

JETRO also warns that if intermediate goods subject to the UFLPA are used, products exported from Japan to the U.S. may also be subject to import bans.

This regulation effectively has extraterritorial effects on Japanese companies.

Impact on the Automotive and Battery Industries

One of the fields that require the most caution is automobiles and storage batteries.

Electric vehicles use numerous materials and components, including lithium, graphite, aluminum, copper, nickel, electronic components, and power control components. While automakers directly purchase completed battery packs and control devices, upstream there are multiple layers such as mining, refining, chemical processing, electrode materials, and cell manufacturing.

With the addition of lithium-related companies, battery material companies, and aluminum companies, it is necessary to re-examine the procurement network for batteries and automotive electronic devices.

Japanese automakers and major parts manufacturers have relatively advanced supplier management systems. However, for secondary, tertiary, and quaternary suppliers, it is difficult to constantly grasp the specific procurement sources of materials.

Moreover, if the same parts manufacturer uses multiple raw material suppliers, there is a possibility that while one batch of goods is problem-free, materials from targeted companies may be mixed in another manufacturing lot.

Management needs to delve not only into company-level verification but also into products, factories, lots, and transaction periods.

Impact on Electronic Devices and Power Equipment

The electronics industry is no exception.

Capacitors, circuit boards, connectors, transformers, power supplies, motors, and communication equipment use aluminum, copper, gold, and chemical materials.

Even if Japanese companies do not directly purchase from targeted companies, there is a possibility that Chinese component manufacturers use materials from targeted companies. Furthermore, those components may be incorporated into Japanese-made industrial machinery, medical devices, home appliances, automobiles, and renewable energy equipment.

If cargo is stopped on the U.S. side, the impact is not limited to product prices.

Delays in delivery to customers, warehouse costs, alternative transportation, production line stoppages, contract violations, loss of sales opportunities, and deterioration of brand image may occur in succession.

Especially if certified parts that are difficult to substitute or customer-specified materials are targeted, changing procurement sources can take months to years.

Food and Consumer Goods Are Not Unrelated

The current measures extend not only to industrial products but also to agricultural products and processed foods.

Xinjiang is known not only for cotton but also as a production area for tomatoes, nuts, seeds, and fruits. When raw materials are processed and pass through factories or trading companies in other regions, it becomes difficult to determine the origin based solely on the final product's labeling.

If Japanese food companies use Chinese raw materials to manufacture products and export them to the U.S., they may be required to verify the production location, farms, collection agents, and processing companies of the raw materials.

The same applies to apparel. It may be necessary to trace back not only to yarn, fabric, and sewing factories but also to cotton production areas and spinning processes to explain the absence of forced labor.

Food and apparel involve many trading companies, and raw materials are easily mixed, making tracking particularly difficult.

Five Items Japanese Companies Should Immediately Verify

First, it is necessary to cross-check the latest entity list with your company's business partner information.

It is essential to verify not only the official names of the targeted companies but also their Chinese names, English names, former names, abbreviations, subsidiaries, affiliated companies, and factory locations. The same company may be registered under multiple names, leading to oversights with simple name searches.

Second, it is necessary to visualize the supply network tracing back to raw materials, not just the primary suppliers.

A response from a primary supplier stating "we do not trade with targeted companies" is insufficient. It is necessary to verify from which companies that supplier purchases materials.

Third, prioritize investigating products intended for the U.S. market.

If it is difficult to examine all products at once, start with products with high sales in the U.S., those containing high-risk materials such as batteries, metals, electronic components, cotton, and food, and those for which alternative procurement is difficult.

Fourth,