JIIA Strategic Comments（2026-17）From Crossfire to Pressure: The MATCH Act and Japan’s Economic Security

Introduction

In April 2026, draft versions of the “Multilateral Alignment of Technology Controls on Hardware Act” (MATCH Act) were introduced in both the US House of Representatives and the Senate.¹  This Act stipulates that if allies and partners do not introduce equivalent regulations governing semiconductor manufacturing equipment and components subject to US export controls against China, the US will expand its extraterritorial jurisdiction over foreign-made items and impose de facto unilateral restrictions.

In a previous contribution to JIIA Strategic Comments, I argued that the reciprocal exchange of economic sanctions and countermeasures between the US and China is drawing Japan and other third countries increasingly into institutionalized patterns of coercive economic interaction, creating “strategic litmus tests” that force them to choose between competing economic and institutional spheres and compelling them to pursue economic security under crossfire.²  Taking the MATCH Act as a concrete case, this paper examines the analytical scope and explanatory utility of the “economic security under crossfire” framework advanced in the aforementioned paper. It further explores the distinctive challenges posed by the MATCH Act and assesses the policy implications and strategic challenges that Japan is likely to face under such conditions.

1. Overview and Background of the MATCH Act

The MATCH Act is a bipartisan bill introduced primarily by Republican Representative Michael Baumgartner and aimed at institutionalizing multilateral coordination on export controls targeting China in the semiconductor sector. The bill’s primary focus is on enhancing the effectiveness of export controls on semiconductor manufacturing equipment and related components through collaboration with allies and partners.

To that end, the bill directs the government to identify semiconductor manufacturing equipment and facilities that should be subject to regulation and requires the executive branch upon the bill’s enactment to immediately engage diplomatically in urging allies and partners to adopt export control measures equivalent to those of the US. The bill calls for the establishment of “countrywide controls" on semiconductor manufacturing equipment, with sales and transfers to all end-users located in a country of concern to be subject in principle to regulation. Here, “country of concern” effectively refers to China.

Further, the bill designates facilities affiliated with Semiconductor Manufacturing International Corporation (SMIC), Yangtze Memory Technologies Corporation (YMTC), ChangXin Memory Technologies (CXMT), Huawei, and Hua Hong Semiconductor as “covered facilities,” and requires that an export license be obtained for the export of “applicable items” and the provision of services to these facilities.³ Engineers from ASML in the Netherlands and Tokyo Electron (TEL) presently provide field services for semiconductor manufacturing equipment delivered to customers in China for maintenance and operational support purposes. If this measure is implemented, the provision of such technical support services will become subject to regulation.

In addition, the bill requires allies and partners to introduce regulations with effects equivalent to those of the US, in principle within 150 days of its enactment. If adequate regulatory measures are not implemented within that timeframe, the US will apply the Foreign Direct Product Rule (FDPR) to extend its export control jurisdiction to products manufactured in those countries. The FDPR is a mechanism that applies US Export Administration Regulations (EAR) to products manufactured abroad using US technology or software and that has been utilized in regulations targeting Huawei and in sanctions against Russia. The MATCH Act is intended to enhance the credibility of the FDPR by legally guaranteeing its potential deployment as a coercive bargaining instrument, thereby creating an institutional mechanism through which the US may incentivize regulatory alignment among allies and partners. As ASML and TEL maintain significant positions in the global semiconductor manufacturing equipment market and continue to engage in certain exports and service activities involving China, the alignment of Dutch and Japanese export control regimes constitutes a key prerequisite for the effective implementation of US semiconductor-related export controls.

The legislative background of the bill is based on the premise that allies and partners have not sufficiently aligned with the US government’s export controls on semiconductor manufacturing equipment to China. Proponents of the MATCH Act in Congress argue that China is exploiting loopholes and asymmetries in US and allied export controls on chipmaking equipment and components to purchase hundreds of billions of dollars’ worth of advanced tools – chipmaking equipment is the largest export from the Netherlands to China, the second largest from Japan, and the third largest from the United States – and that the MATCH Act would close many of these loopholes and turn off the tap, making it among the most important steps that can be taken to preserve long-term US and allied leadership in semiconductor production, toolmaking, and AI.⁴

The US government has urged countries such as Japan to restrict exports of semiconductor manufacturing equipment to China. However, a key feature of this bill is that it seeks to codify the US’s unilateral extraterritorial jurisdiction in order to promote regulatory harmonization among allies and partners. While such measures have primarily been implemented as part of the executive branch’s policy operations, codification would strengthen the foundation for their enforcement and establish a legal framework less susceptible to the policy preferences of the administration or the outcome of diplomatic deals. This also implies that, while such institutionalization enhances these measures’ stability and predictability, it simultaneously carries the potential to reduce the scope for discretionary and flexible implementation by administrative authorities.

2. The MATCH Act and Strategic Litmus Tests

Multilateral coordination on semiconductor export controls targeting China has, until now, generally been formed progressively, with the US taking the lead and its allies and partners following suit. After the Biden administration introduced comprehensive semiconductor export control measures against China in October 2022, Japan and the Netherlands each established related regulations in 2023 and gradually aligned them with those of the US. This regulatory coordination has been formed steadily and progressively through diplomatic negotiations. However, under the second Trump administration, the consistency of this policy has begun to unravel. In May 2025, the administration repealed the AI Diffusion Rule established during the Biden era; it lifted the export ban on NVIDIA’s H20 semiconductors – which had been temporarily imposed in April of that year – between July and August; and in December of the same year, it conditionally lifted the ban on exports of H200 semiconductors to China. The administration thus repeatedly tightened and relaxed regulations within a short period, signifying a de facto shift away from the policy of tightening semiconductor export controls on China that had been in place since the Biden administration.

Furthermore, the second Trump administration has signaled its willingness to utilize export control measures as instruments of economic statecraft and diplomatic leverage. This development suggests a reframing of export control issues as negotiable components within broader trade agreements and bilateral bargaining processes. For example, at the 18th Update Conference on Export Controls and Policy held on March 18, 2025 by the Department of Commerce’s Bureau of Industry and Security (BIS), Commerce Secretary Howard Lutnick stated that he wanted to persuade more US trading partners to adopt export licensing rules like those imposed by the US, adding that the administration would “seek to include export control provisions in those trade agreements”.⁵ Secretary Lutnick made it clear that he intends to leverage trade deals. This suggests that when the US seeks regulatory coordination from its allies and partners, the level of requirements and scope of application might depend on the diplomatic negotiations with those countries.⁶

However, the MATCH Act seeks to lend credibility to the extraterritorial application of export control regulations as a lever in diplomatic negotiations by codifying a deadline for the introduction of regulations and the expansion of the FDPR application as mandatory mechanisms. In other words, this Act can be viewed as an attempt to shift international cooperation on semiconductor export controls against China from the realm of diplomatic negotiations left to the discretionary judgment of the executive branch to a legal framework in which the legislature imposes certain constraints on the executive branch’s policy management. As a result, the US executive branch’s flexibility in implementing foreign and economic security policies will be constrained to a certain extent, and this may also affect the autonomy of allies and partners in their economic security policies. 

As previously mentioned, if the MATCH Act is enacted, the US may expand the application of the FDPR and unilaterally exercise jurisdiction over semiconductor manufacturing equipment produced by allies and partners such as Japan and the Netherlands unless those parties in principle introduce export control measures equivalent to those of the United States within 150 days. In this case, Japanese semiconductor manufacturing equipment makers may face certain restrictions on access to the Chinese market if they comply with US regulations. On the other hand, if these companies continue to export products or provide services to the Chinese market without complying with US regulations, they risk being excluded from the US market and the US-led financial system. In other words, Japanese companies may find themselves caught between competing economic spheres, facing a crossfire in which they are forced to rely on one or the other. 

However, the issue extends beyond the choice of economic sphere. More importantly, there is a growing likelihood that companies will be compelled to choose between mutually competing regulatory spheres. This is evident from the fact that the Chinese government has in recent years been gradually establishing and strengthening its legal framework to counter extraterritorial measures. A particularly symbolic example of this is the “Rules on Counteracting Unjustified Extra-territorial Application of Foreign Legislation and Other Measures,” commonly known as the Blocking Rules, that came into effect in 2021. Under these rules, foreign companies that follow US regulations may face legal liability within China if the Chinese government deems compliance with US export control systems – including the MATCH Act – to constitute “unjustified compliance with foreign laws and regulations”. 

In fact, the Chinese government began fully enforcing these Blocking Rules in May 2026 as a countermeasure against the US decision to add Chinese oil refiners to its sanctions list as part of its economic sanctions against Iran. As a result, Chinese individuals or organizations whose interests have been infringed upon by sanctions imposed by foreign governments, including the US, can now sue individuals or companies that complied with those sanctions in Chinese courts. In other words, compliance with US regulations can now be deemed a violation subject to legal liability under Chinese law.⁷

Furthermore, the Chinese government is seeking to further reinforce the institutional foundation for such countermeasures. At the Lujiazui Forum held in Shanghai in June 2026, Vice Premier He Lifeng indicated a policy to incorporate provisions regarding blocking measures and countermeasures into future financial laws and regulations, thereby expanding the legal means to counter extraterritorial sanctions that China deems inappropriate. Referring to the blocking measures introduced by the Ministry of Commerce in May 2026, he emphasized the need to strengthen countermeasures against unilateral sanctions targeting Chinese companies and “long-arm jurisdiction.” Furthermore, he revealed plans to expand the Chinese financial legal system’s “toolbox” and to continue adding similar blocking measures and countermeasures in the future.⁸ 

In this way, the Chinese government is seeking to deter third countries from following the US-led economic measures against China not only by fully implementing existing blocking regulations but also by incorporating similar measures into new legal frameworks. Consequently, if the MATCH Act is enacted, the reciprocal exchange of extraterritorial measures by the US and expanded countermeasures by China could intensify, further confronting third-country governments and companies with conflicting institutional demands. In other words, the tit-for-tat exchange of measures between the US and China could create new strategic litmus tests for third countries in the semiconductor sector.

The Chinese government has already signaled its opposition to the US Congress’s actions. Since the bill was introduced in April, the Chinese government has made clear that it may implement countermeasures if the bill is adopted. “Should the relevant bills be enacted into law, they would severely undermine the international economic and trade order," a spokesperson for China's Ministry of Commerce reportedly said. China will "decisively take necessary measures to resolutely safeguard the lawful and legitimate rights and interests of Chinese enterprises.”⁹

3. The MATCH Act and Japan’s Economic Security Challenge

The Trump administration has shown some inconsistency in implementing its semiconductor export control policy toward China, and it is not yet entirely clear whether the administration will force its allies and partners to align with these regulations. Meanwhile, there are moves in the US Congress – to a certain extent independent of the executive branch’s policy management – to legally enshrine stronger export controls on China and multilateral regulatory coordination. The MATCH Act is a prime example of this. Consequently, the legislative pressure underlying the MATCH Act could function as an external constraint that Japanese policymakers cannot ignore. As the strategic competition between the United States and China evolves from a contest over economic spheres to one over institutional spheres, Japan is increasingly finding itself caught in a crossfire where it is compelled to respond to potentially conflicting institutional demands. In this sense, the debate surrounding the MATCH Act extends beyond the issue of export control systems; it can be viewed as a call to reexamine the autonomy and adaptability of Japan’s economic security policy.

For Japan, pursuing its economic security interests while under crossfire, the primary policy challenge will likely be shifting from passively following regulatory harmonization to actively shaping it. The 150-day provision of the MATCH Act implies that if Japan continues its traditional approach of sequentially aligning with the US after it tightens regulations, Japan will not only lose the initiative in regulatory matters but may also become subject to extraterritorial application measures under the FDPR. The Japanese government must engage in consultations with the US government and members of the US Congress to influence the specific content of export control policies, exemption measures, operational guidelines, and the design of progress-monitoring mechanisms. It is essential to further revitalize the policy dialogue channels on export controls that the Japanese and US governments have established. Efforts to seek a review of extraterritorial application measures from the perspective of consistency with international trade rules, including those of the WTO, should also be considered.

The second challenge is establishing mechanisms to compensate domestic industries for losses and maintain their competitiveness. If Japan were to introduce regulations equivalent to US regulations inclusive of the MATCH Act, Japanese semiconductor manufacturing equipment manufacturers such as TEL, Nikon, and Canon would inevitably lose sales to the Chinese market. Establishing a trade insurance system to compensate for corporate losses arising from this crossfire emerges as a practical option. In addition, market diversification is being considered so that Japanese companies can recoup the revenue lost in the Chinese market through alternative markets. It is important to revise and update export control measures for semiconductor manufacturing equipment to China in tandem with measures to promote exports of such equipment to friendly nations and partners.

The third challenge is building legal resilience against strategic litmus tests. If China begins full-scale implementation of its Blocking Rules and takes steps to legally prohibit cooperation with US export controls targeting China, Japanese companies will risk legal liability from the regulatory frameworks of both the US and China. Standardizing contract clauses that permit suspension of performance when it becomes difficult to fulfill conflicting legal obligations is a useful practical measure for individual companies to protect themselves. 

The fourth challenge is reconstructing the institutional foundation for plurilateral export control coordination. The reason the MATCH Act seeks to introduce legal deadlines and enforcement mechanisms for multilateral coordination is that existing multilateral export control regimes cannot adequately respond to rapid technological change and shifts in the international political environment. Although the Wassenaar Arrangement (WA) remains the primary framework for dual-use export controls, its ability to foster consensus has significantly declined since Russia’s invasion of Ukraine. The MATCH Act can be understood as one attempt to compensate for this dysfunction. If so, it is necessary to consider establishing a new plurilateral export control coordination mechanism to replace or supplement the WA.

Given that a tit-for-tat exchange of economic measures is anticipated in the wake of the legislation’s passage in the United States, however, it will not be easy to ensure economic security while under crossfire.¹⁰ What makes the issues surrounding the MATCH Act unique is that these measures are being institutionalized as legislative measures rather than administrative measures by the executive branch. As mentioned earlier, regulations institutionalized by the legislature independently of the executive branch may reduce the administrative authorities’ discretion and flexibility in policy implementation. Consequently, even if the Japanese government looks to achieve a certain degree of coordination through diplomatic negotiations with the US president, the Department of Commerce, and other agencies, there is no guarantee that it will be able to avoid the invocation or application of statutory extraterritorial measures. Put another way, the very scope for resolving issues through diplomatic negotiations, as done heretofore, may narrow. Therefore, Japan must have the capacity to respond without relying solely on policy coordination with the US, all the while continuing such coordination. With the prospect of US-China competition continuing and tit-for-tat economic measures becoming institutionalized, both businesses and the government must be ready to enhance their adaptability and flexibility in the face of institutional risks.

Conclusion 

The economic sanctions and countermeasures imposed between the US and China are creating a structure in which, through extraterritorial application, third countries are drawn into the rivalry, leading to conflicting regulatory compliance demands on the governments and companies of those third countries. The MATCH Act could very well have an impact on the autonomy of allies’ and partners’ economic security policies by applying US export control regulations extraterritorially through the FDPR. China has pushed back against these US moves and explicitly stated its intention to develop and strengthen countermeasures, including its Blocking Rules. These developments suggest that the “weaponization of economic interdependence” is not limited to bilateral relations but is having reverberations on third countries, forming strategic litmus tests that impose conflicting regulatory demands. The debate surrounding the MATCH Act can be viewed as demonstrative evidence that such a structure has emerged in the semiconductor manufacturing equipment sector as well. 

Under these circumstances, Japan must build the policy capacity to respond to conflicting demands for compliance with institutional norms issued by competing institutional spheres, while taking a cross-cutting approach that encompasses security, economic, and legal policy. Confronting this economic security dilemma will require Japan to proactively navigate conflicting demands for compliance with institutional norms under the constraints created by institutional friction between competing major powers. 

As of the time of this writing, there admittedly remains significant uncertainty regarding whether the MATCH Act will ultimately be enacted and, if so, whether Japan will in fact fall under the scope of the FDPR. Even following the US-China summit in May 2026, the direction of US export control policy toward China and its specific approach toward allies and partners remain unclear. While there are signs of some wavering in the executive branch’s policy, moves aimed at strengthening and institutionalizing export controls toward China are becoming apparent at the congressional level. Therefore, Japanese policymakers must closely monitor legislative developments surrounding the MATCH Act and, regardless of whether it is enacted, proceed to consider and prepare policy measures that address the prospect of an increasingly restrictive institutional environment.  

Manuscript completed on Jul. 19, 2026.

1. On April 22, 2026, the House Foreign Affairs Committee voted 36 to 8 to refer the amended H.R. 8170 to the full House. U.S. Congress. (2026), Multilateral Alignment of Technology Controls on Hardware Act (H.R. 8170), <https://www.congress.gov/bill/119th-congress/house-bill/8170/text#H0CDDB8E9EAF84DABB5AAE617628A2064>; and U.S. Congress. (2026), Multilateral Alignment of Technology Controls on Hardware (MATCH) Act (S. 4281), <https://www.congress.gov/bill/119th-congress/senate-bill/4281/text>.
2. Yoshiaki Takayama, “Caught in the Crossfire: The Weaponization of Economic Interdependence and the Rise of Strategic Litmus Tests,” JIIA Strategic Comments (June 8, 2026), <https://www.jiia.or.jp/jpn/report/2026/05/strategic_comment_2026-15.html>.
3. Karen Freifeld, “U.S. Lawmakers Scale Back Bill Targeting Chinese Chipmaking,” Reuters, April 16, 2026.
4. Risch, Ricketts, and Kim Introduce the MATCH Act; Level the Global Playing Field for U.S. Tech, United States Senate Committee on Foreign Relations, April 8, 2026, <https://www.foreign.senate.gov/press/rep/release/risch-ricketts-kim-introduce-match-act-level-the-global-playing-field-for-us-tech>.
5. Bureau of Industry and Security, The Update Conference on Export Controls and Policy, March 18–20, 2025, Washington, DC, <https://www.bis.gov/update-conference-2025>.
6. In fact, the Trump administration is leveraging trade deals to expand the number of countries aligned with its export control policies. In October 2025, the Trump administration announced that it had already secured – or was about to secure – commitments from Malaysia, Thailand, Cambodia, and Vietnam to cooperate on export controls, investment regulations, and other trade measures related to economic security. On October 26, 2025, the US government issued a joint statement regarding reciprocal trade agreements with these countries, revealing that their governments had committed to addressing export control circumvention and cooperating on investment security. The US government announced plans to “finalize” trade agreements with Thailand and Vietnam within “the coming weeks” and published two reciprocal trade agreements reportedly agreed upon with Malaysia and Cambodia. These reciprocal trade agreements included more detailed commitments from each country regarding export controls and sanctions, including a pledge to support the US government’s enforcement of regulatory measures under the Entity List (EL) and the Specially Designated Nationals List (SDN List). The White House emphasized the deal’s achievements, stating, “Under the two agreements, tariffs will be eliminated or significantly reduced across a massive swath of US exports, non-tariff barriers will be addressed, and market access will be expanded for US products.” The White House, “President Trump Opens Asia Trip by Securing Landmark Wins for America,” Oct. 27, 2026, <https://www.whitehouse.gov/releases/2025/10/president-trump-opens-asia-trip-by-securing-landmark-wins-for-america/>; Agreement Between the United States of America and Malaysia on Reciprocal Trade, The White House, Oct. 26, 2025, <https://www.whitehouse.gov/briefings-statements/2025/10/agreement-between-the-united-states-of-america-and-malaysia-on-reciprocal-trade/>; and Agreement Between the United States of America and the Kingdom of Cambodia on Reciprocal Trade, The White House, Oct. 26, 2025, <https://www.whitehouse.gov/briefings-statements/2025/10/agreement-between-the-united-states-of-america-and-the-kingdom-of-cambodia-on-reciprocal-trade/>.
7.  Yoshiaki Takayama, “Caught in the Crossfire: The Weaponization of Economic Interdependence and the Rise of Strategic Litmus Tests,” JIIA Strategic Comments, (June 8, 2026), <https://www.jiia.or.jp/jpn/report/2026/05/strategic_comment_2026-15.html>.
8. Sylvia Ma, “China Vows New Legal Shield That Could Counter U.S. Sanctions and Protect Finance,” South China Morning Post, June 17, 2026; and “China Vows to Improve Anti-Sanctions Measures in Financial Law,” Bloomberg, June 17, 2026, <https://www.bloomberg.com/news/articles/2026-06-17/china-s-finance-chiefs-take-center-stage-with-economy-slumping>.
9. Karen Freifeld and Laurie Chen, “China Criticizes U.S. Chip Equipment Bill in Run-up to Beijing Talks,” Reuters, May 13, 2026.
10. Regarding how middle powers should respond when caught between competing great powers, Michael Beckley argues that choosing a system to support is inevitable. In other words, it is difficult for a middle power to continue reaping security benefits from one great power while simultaneously deriving economic benefits from the other; the challenge, he argues, lies not in avoiding the choice itself, but in “how to choose a patron without becoming a pawn.” Furthermore, Beckley points out the importance of coordinating policies with the chosen superpower. Following this line of argument, a key policy challenge for Japan is to closely coordinate with the US – rather than China – on the level of export control regulations and operational policies. Michael Beckley, “The Middle Power Delusion: Not Choosing Is Not an Option,” Foreign Affairs, May 25, 2026, <https://www.foreignaffairs.com/united-states/middle-power-delusion>.