In September 1940, Nazi Germany, Kingdom of Italy, and Empire of Japan had allied under the Tripartite Coalition as the Axis powers. The United States banned the shipment of aviation gasoline to Japan in July 1940, and by 1941 shipments of scrap iron, steel, gasoline and other materials had practically ceased. Meanwhile, American economic support to China began to increase.
Japan and the USSR signed a neutrality pact in April 1941 and Japan increased pressure on the French and Dutch colonies in Southeast Asia to cooperate in economic matters. Japanese forces occupied the naval and air bases of southern French Indochina on 22 July 1941. The Philippines was almost completely surrounded.
General George C. Marshall, US Army Chief of Staff, stated, "Adequate reinforcements for the Philippines, at this time, would have left the United States in a position of great peril, should there be a break in the defense of Great Britain."
A campaign for independence from the US which had been ongoing since 1919 resulted on 17 January 1933 in the passage by the US Congress of the Hare–Hawes–Cutting Act over the veto of President Herbert Hoover. The law promised Philippine independence after 10 years, but reserved several military and naval bases for the United States, as well as imposing tariffs and quotas on Philippine exports. Philippine Senate President Manuel L. Quezon convinced the legislature to reject the bill. Subsequently, the Tydings–McDuffie Act, which eliminated provisions for US military reservations and substituted a provision for "ultimate settlement", became US law on 24 March 1934 and was accepted by the Philippine legislature on 1 May. The impact of this on the future defense of the Philippines with the establishment was to prove disastrous. During the 10-year transition period, the Philippine Constabulary was vested with an ever-increasing responsibility for defending the borders of the Philippines. The forces of the US Army settled at around 10,000 men.
The US Army had, however, already spent millions constructing forts and air strips throughout Luzon. This included the harbor defenses in Manila Bay, at Fort Mills on Corregidor Island and at Grande Island in Subic Bay. There were also bases at Nichols Air Station (now Villamor Airbase), Nielson Air Base (now Makati City—Ayala and Buendia Avenues lay over the original landing strips), at Fort William McKinley (now Fort Andres Bonifacio and the American Cemetery), Camp Murphy (now Camp Aguinaldo and Camp Crame) in Quezon City, Camp O'Donnell in Tarlac and a series of airbases and army installations in Pampanga including Fort Stotsenburg, Clark Air Base, as well as Camp Wallace in La Union, the Naval Station in Sangley Point, Cavite City, Camp Keithley in Lanao, Camp Eldridge in Los Baños, Laguna and Camp Henry T. Allen in Baguio City. Other fields in Tugegarao, Aparri, Isabela, Nueva Ecija, Legaspi, Bataan, and Del Monte in Davao were also built using US funds prior to and during the first years of the 1935 provisional Commonwealth.