Supply Chain Contracts in Flux as US Legislative Delays and Japan-China Tensions Create Global Uncertainty

Businesses are being forced to fundamentally reconsider their supply chain strategies and contractual agreements as geopolitical tensions and legislative uncertainty inject significant risk into international trade. According to a Discovery Alert report, escalating tensions between Japan and China are compelling Japanese companies to accelerate supply chain diversification. Japan’s heavy reliance on China for rare earth elements has created a strategic vulnerability, with China reportedly using administrative tactics like slowing licensing procedures to apply pressure without formal export controls. This has prompted a wave of new investment into alternative manufacturing hubs in Vietnam, Thailand, and Malaysia and is forcing a reassessment of technology transfer requirements embedded in existing contracts.

In a different manifestation of external pressure, businesses relying on United States trade preference programs are facing prolonged uncertainty. Key tariff preferences for Haiti under the CBTPA and for African nations under the African Growth and Opportunity Act (AGOA) expired on September 30, 2025, JDSupra reports. While the House of Representatives passed bipartisan bills on January 12, 2026, to retroactively renew and extend the programs to 2028, the legislation is currently stalled in the Senate Finance Committee. The delay, tied to disputes over a larger government funding bill, highlights a significant structural risk for companies that have built long-term supply chains and investment plans around these programs.

These parallel developments in Asia and the U.S. underscore a challenging environment for international contracts. Whether driven by the strategic rivalries of global powers or the procedural delays of domestic politics, the stability that underpins long-term commercial agreements is being eroded. Companies are now confronted with the urgent need to build more resilient supply chains and incorporate greater flexibility into their contracts to mitigate risks that are increasingly beyond their direct control.