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In 2016, the Commerce Department sought information regarding whether Huawei was possibly sending US technology to Syria and North Korea as well as Iran.

"The rapidly dwindling good-feeling towards the U.S. and China's vague trade war ceasefire turned actively hostile on Thursday, investors fearing that, 90-day truce or not, the relationship between the two superpowers might be about to take a turn for the worse".

But casting Huawei as the Chinese equivalent of Apple understates its reach and importance - Huawei also manufacturers a tremendous amount of the equipment used by phone and internet companies, as well as providing IT consulting services both in China and around the globe.

Mulroney said Canada should be prepared for "sustained fury" from the Chinese and said it will be portrayed in China as Canada kowtowing to Trump.

He also said Meng's legal rights must be ensured, adding that neither Canadian nor American officials had so far responded to China's concerns. "The biggest problem will be the ability to actually verify things rather than just being strung along, because we've seen that movie before".

It says China will closely follow the developments on the case and "take all measures to resolutely protect the legitimate rights and interests of Chinese citizens".

The news also resulted in another down day for markets in Asia.

Huawei's close ties with the Chinese government sparked fears that Beijing could gain access to their networks, enabling it to gather intelligence in their countries, despite repeated denials from the company.

Ms Meng faces extradition to the United States amid reports she violated American sanctions against Iran. Meng Wanzhou aka Sabrina or Cathy meng serves as CFO and deputy chairwoman of Huawei's board.

The US Justice Department on Wednesday declined to comment.

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Following the G-20 talks, the US and Chinese delegations released significantly different accounts of what was agreed upon.

US stock futures and Asian shares tumbled as news of the arrest heightened the sense a major collision was brewing between the world's two largest economic powers, not just over tariffs but also over technological hegemony.

If there is no deal at the end of that period, the USA will increase tariffs on US$200 billion of Chinese goods from 10 per cent to 25 per cent.

"Not to sound naive or anything, but I believe (Chinese) President Xi (Jinping) meant every word of what he said at our long and hopefully historic meeting", Trump said.

Benchmark U.S. crude lost $1 to $51.89 a barrel in electronic trading on the New York Mercantile Exchange. "The fact is their own people should welcome that because if you have a more democratic market in some sense. that will be a good thing for China, as well", Navarro said.

"We need a comprehensive plan to hold the Chinese and their state-sponsored entities accountable for gross violations of the law and threats to our security", he said.

"The Chinese are likely to play tit for tat on this one and we should be ready for it", said Fen Hampson, the director of the global security program at the Centre for Governance Innovation in southern Ontario.

The Chief Financial Officer of Huawei Technologies has been arrested in Canada.

For the same reason, Australia's government blocked China's telecom giant Huawei from its 5G mobile network last summer.

Earlier this year, the U.S. imposed a seven-year ban on the sale of crucial United States components to Chinese smartphone maker ZTE after finding it had failed to take action against staff who were responsible for violating trade sanctions against Iran and North Korea. It was not clear if they were aware of the arrest beforehand, however. Washington has previously raised concerns about the Chinese conglomerate because of its links to Beijing's government.