The trade war between Japan and South Korea is escalating

Japan confirmed Friday it will remove South Korea from a list of trusted export destinations, which would expand the number of restricted materials used by South Korean makers of OLED screens, televisions and semiconductors.

The new list comes a month after Japan imposed export curbs on three key materials used in Korea’s chip industry.

South Korea’s two tech giants, Samsung Electronics Co. and SK Hynix Inc., are already struggling with the earlier export restrictions. Shares of Samsung fell as much as 2 percent in Seoul on Friday, while SK Hynix dropped as much as 3 percent.

Most of the top 20 items needed for South Korea’s technology industry are highly dependent on Japanese suppliers, such as scrap steel, medical equipment, plastics and some chemical products, according to SK Securities. Another major worry is chipmaking equipment, which is dominated by Japanese firms.

Tensions between the two countries have been flaring over whether Japan has sufficiently compensated Koreans who suffered under Japan’s 1910-45 colonial rule of the peninsula.

The latest trade tensions add to the problems facing South Korea, which is already ailing from the U.S.-China trade war. The export-driven economy, a bellwether for global trade, posted a slump in exports for eight straight months for July, marked by a decline in demand from China and falling prices for semiconductors.