Most of the political and economic world is, understandably, focused on the US-China trade war.

But there's another trade conflict brewing that could also have global economic ramifications: the fight between Japan and South Korea.

Tensions have escalated over wounds from World War II and spilled over into export controls, which could hurt the tech industry and more.

While there is more likely to be a resolution in this dispute than in the US-China conflict, there are still political worries all around.

Rory Green is an economist at TS Lombard, an economics and investing research group covering China and North Asia.

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While the world has understandably focused on the trade war between the US and China, a dispute between Japan and South Korea — fueled by the legacy of World War II — is threatening to disrupt global supply chains and the US-led security apparatus in Northeast Asia.

War wounds were reopened in October, when the Korean Supreme Court ruled in favor of allowing people to sue Japanese companies for wartime damages. In retaliation, Japan announced export controls on specialized semiconductor materials.

Nationalist rhetoric has since intensified on both sides. The public outcry in South Korea, which was occupied by Japan from 1910 to 1945, is significant. There have been two cases of self-immolation in protest at trade tactics.

Amid the jingoist fervor, the two countries have traded economic blows. Japan and South Korea removed each other from their respective export "white lists," adding heavy regulatory hurdles to bilateral trade.

America's foremost Asian allies are even taking steps in the security realm. Last month, Korea left a joint US-Japan intelligence-sharing pact, known as the General Security of Military Information Agreement (GSOMIA), further escalating tensions.

A war of words will rage on in the coming weeks, but bilateral trade is expected to continue with only marginal disruption. Politics is driving the disagreement, as such Japanese Prime Minister Shinzo Abe and South Korean President Moon Jae-in will determine market and geopolitical risk. The two leaders have little to gain politically by backing down, but faltering domestic activity incentivizes avoidance of mutual economic destruction.

Seoul is seething. The ever-present anti-Japan sentiment, a relic of Japan's 35-year occupation, has boiled over. Moon is caught between rampant nationalism and a tanking economy.

The president's support base, the Korean left, is solidly in favor of a tough response. Moon's political opposition, in contrast, has criticized the overtly "emotional" reaction by Seoul. With this backdrop, the decision to leave the GSOMIA is a sly move. Moon appeases his followers by escalating but also avoids inflaming tensions on the economic front. Moreover, the decision adds pressure on the US to mediate the dispute.

For Abe, there is little incentive to capitulate. Potential economic damage is heavily skewed toward Korea, and pressure from the domestic business community remains muted. However, Abe, taking a leaf from the Trump playbook, may allow tensions to abate before dialing up the rhetoric ahead of an October tax hike in order to shore up domestic support.

Abe timed the initial flare-up to coincide with Japan's Upper House elections, with regional tensions helping the prime minister's party cling on to a slim majority. But overall, Abe's incentives are skewed away from conflict; the prime minister does not want a dispute with the country's third-largest trade partner to disrupt fragile growth.

Rising tensions threaten a bottleneck in the global electronics supply chain. Japan controls 80% of the global supply of specialized semiconductor materials. For its part, Korea produces 70% of the world's memory chips and has a 90% market share in OLEDs, a key technology used in TVs and computer monitors.

Thus, should nationalist Trump economics and trade friction escalate, firms from Apple to Amazon will face massive supply disruption. A full ban on semiconductor-component exports could conceivably cause prices to rise by 50%. Devices from tablets and phones to laptops and routers would be affected.

But such a disastrous outcome will probably not come to pass. As it stands, the export controls remain purely administrative. Tokyo maintains that exports will be approved if stringent application procedures are met. Samsung and SK Hynix, South Korea's billion-dollar behemoths, are well able to comply with reasonable requirements. Moreover, Korean chip producers have on average one to two months' inventory on which to fall back.

Even if administrative hurdles stretch beyond one month, the result will be a minor reduction in semiconductor output. Globally, memory-chip demand is soft, and inventory levels are elevated. Indeed, the industry as a whole may well welcome a short-supply shock, which would accelerate a drawdown of inventories and provide sustainable support to memory-chip prices.

The expansion of trade friction beyond semiconductors to broader "white lists" will act as a further drag on both countries' exports in September and October. However, August will likely see an improvement in bilateral trade as firms increase imports ahead of regulatory burdens.

White-list removal means importers need to follow a beefed-up compliance procedure for each sale of "strategic" products, such as materials and certain car parts. This is an administrative barrier, not an outright ban or tariff. Korea was the only Asian nation on Japan's white list. Taiwan and Singapore, two tech-intensive, export-oriented economies, do not suffer from overly burdensome regulatory regimes.

In the short term, risks from this less-well-known trade war are muted. Politicians are serving up nationalism for voters but pragmatism for businesses. A permanent resolution to this dispute will only come via a bilateral meeting between Moon and Abe. The earliest possible get-together is four months away.

In the interim, combative rhetoric will spook markets, but investors need to ignore the noise and focus on economic measures, which remain mild.

Looking beyond the current spat, there is danger. The relative decline in the US's Asian presence and the ascendancy of revisionist political parties in both Japan and Korea point to a prolonged period of rolling clashes between the East Asian neighbors.

Rory Green joined TS Lombard in 2018 as an economist covering China and South Korea. Before that, Rory spent four years with PRC Macro Advisors, a Beijing-based economic-research firm specializing in China's political economy.