Market Overview

Huawei CFO Arrest Fuels US-China Trade Tensions

Huawei CFO Arrest Fuels US-China Trade Tensions

The Chinese embassy to Canada demands immediate release of Huawei's global CFO arrested in Vancouver Dec. 1 on behalf of U.S. authorities, according to late Wednesday reports.

What Happened

Canada detained Wanzhou Meng with intentions to extradite her to the U.S. for charges filed in a Brooklyn federal court. Meng allegedly violated Iran sanctions, although Huawei said it was unaware of any wrongdoing and had been given little information about the allegations.

The U.S. had been investigating Huawei since at least 2016 for shipping U.S. products to Iran and other sanctioned nations.

Huawei is the second-largest manufacturer of smartphones in the world, behind Apple Inc. (NASDAQ: AAPL).

Why It’s Important

The arrest of Meng, the daughter of Huawei’s founder, drew immediate backlash from her home nation. Some accused the U.S. of trying to stifle smartphone competition by setting back the world’s second largest manufacturer.

Others speculated the arrest was a tactic in President Donald Trump’s trade strategy and noted the move could derail improving trade talks, including a 90-day truce signed by Trump and Chinese President Xi Jinping on the day of Meng’s detention.

What's Next

The global implications of Huawei’s entanglement are yet to be seen, but the markets saw immediate consequences for the firm’s supply chain. QUALCOMM, Inc. (NASDAQ: QCOM) fell 3 percent and Intel Corporation (NASDAQ: INTC) 2.4 percent on the news.

The U.S. scheduled a Friday court hearing for Meng.

Related Links:

The US-China Trade Truce: 'You Don't Know For Certain How This Is Going To Play Out'

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