Embargoes and Sanctions - World war ii
In 1938 Roosevelt failed to secure revision of the Neutrality Act. It was not until Germany invaded Poland in 1939, setting off World War II, that Congress revised the act. Even then, Roosevelt had to disguise his actions by claiming that the arms embargo actually endangered the peace of the United States. He also offered to bar American ships from designated war zones. He was thus able to persuade Congress to place arms on the same cash-and-carry basis as other commodities. He then went on to greater aid measures, such as the destroyer deal and lend-lease.
But while Roosevelt turned from sanctions toward measures of positive aid to Europe, in Asia his administration moved toward a more pointed use of embargoes against Japan. Japan relied heavily upon American oil and metals to supply its war effort in China. Any threat to stop those exports would have a significant impact on Japanese plans. The swing of public opinion and the revision of the Neutrality Act in 1939 allowed Roosevelt to take some action on behalf of China. So, in May 1939 the United States notified Japan that it was withdrawing from the 1911 Treaty of Commerce. According to terms of the treaty, in six months the United States would be free to limit or terminate exports to Japan. Roosevelt hoped this would give the Japanese pause, but Japan continued its war in China. The U.S. government hesitated to implement sanctions for fear that they would drive Japan to replace the embargoed items by invading new sources of supply. This would most likely be Southeast Asia, where French, British, and Dutch colonies were supplying those same vital materials to America's allies in Europe. The six-month period of grace passed, then a year, with no sanctions applied.
In July 1940, a cabinet change in Japan signaled a more aggressive Japanese policy in South-east Asia. With that, the United States imposed an embargo on aviation gasoline and high-grade scrap iron to Japan. This embargo affected only a fraction of exports to Japan, and the U.S. government went to some lengths to justify the embargo on the grounds of American domestic needs rather than any displeasure with Japan. Still, the embargo signaled the Japanese that the United States would oppose any moves against Southeast Asia.
Instead of backing down, Japan accelerated its search for more secure sources of vital raw materials. It extorted concessions from the Dutch East Indies, coerced Vichy France into allowing Japanese occupation of northern Indochina, and began negotiations for an alliance with Germany and Italy. The United States responded with a complete embargo on scrap iron, but this was followed the very next day by the formal announcement of the Axis pact. The United States continued to expand its embargo, extending it to tools, iron, steel, copper, bronze, and many other critical metals. When the United States intercepted Japanese messages detailing plans for further expansion in Southeast Asia and reports arrived that Japanese transports were moving on southern Indochina, Roosevelt decided on a last-ditch gamble to stop Japanese expansion. He issued an order freezing all Japanese assets in the United States. Only a special license from the U.S. government could release Japanese assets to pay for American exports, including, most critically, oil. When the British and Dutch joined the oil embargo, it cut off the vital Southeast Asian sources of raw materials as well. With only a two-year supply of petroleum, Japan either had to give up the war in China or secure its own sources of supply. Japan first tried diplomacy, but negotiations with the United States failed, and Japan declared war. During World War II, the United States used the 1917 Trading with the Enemy Act to impose a complete embargo on the Axis powers.