President Donald Trump has a bill on his desk that could kick several Chinese companies off of U.S. stock exchanges and inflame an already strained relationship between Washington and Beijing.

The Holding Foreign Companies Accountable Act would force companies to give up their listings on Wall Street if they refuse to open their books to U.S. accounting regulators. It could also bar them from raising money from American investors.

While the law technically applies to companies from any country, it’s mainly targeting Chinese corporations.

“U.S. policy is letting China flout rules that American companies play by, and it’s dangerous,” said Sen. John Neely Kennedy, R-La., in a statement.

Chinese companies trading in the U.S. are no stranger to accounting scandals.

Just this year, Luckin, a Chinese coffee chain that billed itself as a rival to Starbucks, was delisted from the Nasdaq after the company fabricated $300 million in sales.

If the law is passed, it could affect companies like Alibaba, oil giant PetroChina, JD.com and more than 200 other names.

Chinese companies listed on U.S. exchanges have a combined market capitalization of about $2.2 trillion, so a mass delisting would mean major movements of capital. Something that experts say could backfire on American investors.

“If the bill becomes law, I think these companies are going to leave our exchanges and they’re going to leave on prices that are not going to make American investors better off,” said Jesse Fried, a professor of law at the Harvard Law School, in an interview on CNBC’s “Street Signs Asia.”

And we’re not just talking about big institutional names on Wall Street. This could also have a huge impact on retail investors, who either directly own shares of Chinese companies, or have retirement portfolios that include ETFs that cover these firms. 

Some say that Chinese authorities wouldn’t actually mind if this law goes through.

Let’s say Alibaba does get delisted. It actually speeds up something that Beijing is already trying to do: build up its own exchanges. 

More major Chinese companies listing at home would be welcome news, and it wouldn’t be so bad for these firms either.

Chinese markets are far more sophisticated today than they were 10 years ago, so companies retrenching and listing in China wouldn’t be as limiting as it once was.

And in terms of logistics, many of China’s blue-chip companies already have secondary listings in Hong Kong, which would make the transition far easier.

A company like Alibaba leaving the United States also appeals to Beijing, because it reduces the role of U.S. regulators.

“Having these companies trade in the United States gives rise to frictions with the Chinese authorities, because the U.S. authorities want to impose their rules on these companies,” Fried explained.

Beijing doesn’t allow audits of its companies that trade in the U.S. to be inspected by American regulators, a major point of contention between the two countries.

Also at issue – keeping companies in check.

“Even though I think the Chinese government is very proud of Alibaba and what it has accomplished, they are not interested in having these private enterprises grow so powerful,” continued Fried. “This would be a way of cutting them down to size.”

But analysts say that a delisting exodus is actually pretty unlikely.

“There is potential for a negotiated solution, even if the legislation is signed into law,” said Marc Iyeki, former head of Asia-Pacific listings at the New York Stock Exchange.

Firms have three years to comply, which is a lot of time.

“The three-year grace period indicates that Congress is willing to give Chinese companies and their auditors, not once, not twice, but three chances to comply,” Iyeki said.

Iyeki said that Chinese regulatory authorities have also indicated that they are ready to sit down to reach a mutually acceptable solution, and there are signs that the Securities and Exchange Commission is ready to negotiate.

“The SEC appears to be moving forward on preparing a co-audit solution based on PWG [President’s Working Group] recommendations, so it seems they, too, are envisioning a possible resolution,” Iyeki said 

Ultimately, we are dealing with the world’s two largest economies, whose financial markets are becoming more and more intertwined.

Decoupling the two is complicated and not particularly advantageous for either country.