It was summertime but relations had never been chillier between the U.S. and Japan than in July, 1941.
Tokyo was strengthening its position in the Pacific by occupying Indo-China and moving through Southeast Asia. Given that France had long occupied parts of the region, and Germany, a Japanese ally, now controlled most of France, the French puppet government “agreed” to the occupation of its Indo-China colonies. Japan then occupied Cam Ranh Bay naval base, 800 miles from the Philippines where Americans had troops.
President Roosevelt retaliated on July 26 by freezing all Japanese assets in America. Britain and the Dutch East Indies followed suit. The result: Japan lost access to three-fourths of its overseas trade and 88 percent of its imported oil. Japan had only three year’s of oil reserves, and even less if it went to war and consumed fuel at a more frenzied pace.
Japan’s immediate response was to occupy Saigon, again with Vichy France’s acquiescence. If Japan could gain control of Southeast Asia, including Malaya, it could control the region’s rubber and tin production–a serious blow to the West, which imported such materials from the East. Japan was now faced with a dilemma: back off of its occupation of Southeast Asia and hope the oil embargo would be eased–or seize the oil and further antagonize the West, even into war.