President Donald Trump’s tariffs may throw a wrench in a po✤pular corporate strategy: shift production away from China and to Southeast Asia.

Many U.S. companies have🧔 refocused supply chains to Vietnam🅷, Thailand and other countries in the region, partly because labor costs have risen in China over the decades. They’ve also tapped into the once-hot trend of “friend-shoring,” where firms look to shift supply chains away from China and toward U.S. allies.

However, Trump plans to impose steep tariffs on the region—46% on Vietnam, 36% on Thailand, 49% on Cambodia, and 24% on Malaysia, for example. The countries have built large trade surpluses wi🌄th the United States, as factories that make Nike apparel or Apple products have moved in. 

“This effectively closes off options for rerouting international trade flows, which mean🙈s these countries will not only feel the full force of tariffs but there will be broader disruption to global supply chains,” Jeremy Leonard, managing director of global industry services at Oxford Economics, wrote in a note to clients.

Southea💫st Asian Countries Are Looking to Make a Deal—As Apparel Makers Hold Their Breath

Changes may be coming as Wednesday's tariff deadline approaches. Cambodia has offered to cut tariffs on U.S. goods, Indonesia is offering to negotiate and Thailand is seeking to boost U.S. imports. 

Trump has said Vietnam has offered to cut its tariffs to zero. However, his trade advisor Peter Navarro later told CNBC that it “means nothing to us because it’s the nontariff cheating that matters,” citing concerns about intellectual property theft or Chinese products making their way to the U.S. through Vietnam. Bloomberg reported that a top Vietnamese official has headed to Washington, D.C., for negotiations.

The outcome of the negotiations could have a significant impact on American cꦆompanies. Nike’s stock fell sharply after Trump’s tariff announcements and has failed to regain momentum. The company sources 50% of its shoes and 28% of its apparel from Vietnam, according to its most recent annual report.

Nearly 20% of U.S. apparel imports and 34% of footwear imports come from Vietna🍌m, and Cambodia, Bangladesh and Indonesia are also major exporters, Straton wrote.

But It's Not Just Southeast Asia That Will Be Affected

Though markets had expected♏ punishing tariffs on China, the tough policies against Southeast Asia were a surprise, Morgan Stanley consumer retail analyst ♏Alex Straton wrote in a note to clients last week. 

“Past♔ efforts to diversify away from China will no longer afford much protecti🎀on,” Straton wrote.

Global growth could🅰 al𝔉so suffer as Trump aims to “accelerate a significant reorganization of global trade and financial flows,” wrote Alejo Czerwonko, chief investment officer for emerging markets in the Americas at UBS.

“Such a transformation won‘t occur overnight, and the transition period will undoubtedly present challenges for the global economy,” Czerwonko wrote.