The quote from podcat above related to the trade mechanism where your surplus resources are sold on the open market. No-one can choose who these get sold to, unless there is an embargo.
But you always choose who to buy from. So if you are Japan and don't want to assist China, don't buy their resources, find another country who will trade with you. But if you are selling resources on the open market, then you can't prevent China buying them.
But you can close your economy by changing your laws, so you don't sell any resources to anyone. This is possible as a fascist or communist, but of course could hurt your own allies, and even hurt yourself if you have large surpluses of resources that you can't use in your own factories. If you stop selling these you lose the factories abroad that can provide you consumer goods and help with construction projects.
This prevents gamey action by say a Romania player, by refusing to sell any oil to non-Axis countries in 1936. However, if Romania joins a war, then trade with the enemy automatically stops.
The embargoes in the US National Focuses allow them to embargo Japan, or others. There are not similar embargo options visible in the screenshots of fascist or communist National Focus trees. It makes no sense for Japan for instance to embargo USA at any stage. USA frankly, wouldn't care less - it doesn't need anything that Japan would have for sale.
We can assume that is the reason there is no embargo option available in the diplomatic menu any more.