The Trump administration’s tariffs are undoing an economic model that has driven development across Southeast Asia. The last few years have seen the rapid expansion of Chinese companies to neighboring countries, as anti-Chinese trade barriers rose across the Global North. Now, crackdowns on transshipment are forcing Chinese investors to rethink the “China+1” strategy.

Investing in Southeast Asia used to buy Chinese companies some protection from U.S. pressure. But while China has managed to wrestle down some of the levies in its ongoing negotiation with the U.S., many countries in the region now face significant tariffs. In some cases, these remain lower than the cumulative effect of old and new tariffs on Chinese goods, but they’re eating away at the region’s competitiveness.