South Korea Wednesday officially dropped Japan from its "white list" of trusted trade partners, the latest move in a bitter row stemming from Tokyo's use of forced labour during World War II.
Seoul had already warned Tokyo it would reciprocate following a similar move by Japan in late August to downgrade South Korea's trade status.
Local companies shipping strategic goods to Japan would now have to submit more documents and approval would take around 15 days instead of five, Yonhap news agency reported, quoting the South Korean trade ministry.
Seoul and Tokyo have been embroiled in the trade dispute since July, when Japan tightened export controls on three chemicals essential to key products of South Korean tech companies such as Samsung.
Tokyo says its decision was made on national security grounds, but it followed a series of South Korean court rulings ordering Japanese firms to pay for forced labour during World War II.
South Koreans have since mounted a widespread boycott of Japanese goods, including beer, cosmetic products and cars, among others.
Imports of Japanese beer — long a firm favourite with South Korean drinkers — slumped to almost zero last month, according to trade data released on Monday.
Several South Korean airlines including flag carrier Korean Air have also suspended routes to Japan because of falling demand from South Koreans.
Japanese car makers have also seen sales in South Korea slump in recent months.
Both Japan and South Korea are market economies and major US allies faced with an overbearing China and nuclear-armed North Korea.
But their relationship continues to be heavily affected by Japan's 35-year colonial rule of the Korean peninsula in the early 20th century.
Japan says all reparations claims were settled under a 1965 treaty and associated economic agreement that was supposed to have normalised relations.