Relations between Japan and the United States became increasingly tense after the Mukden Incident and the subsequent Japanese military seizure of parts of China in 1937–39. American outrage focused on the Japanese attack on the US gunboat Panay in Chinese waters in late 1937. Japan apologized after the attack—and the atrocities of the Nanjing Massacre at the same time. The United States had a powerful naval presence in the Pacific, and it was working closely with the British and the Dutch governments. When Japan seized Indochina (now Vietnam) in 1940–41, the United States, along with Australia, Britain and the Dutch government in exile, boycotted Japan via a trade embargo. They cut off 90% of Japan's oil supply, and Japan had to either withdraw from China or go to war with the US and Britain as well as China to get the oil.