Amidst the rising trade tensions between the US and China, the 90-day temporary resolution reached at the Argentina G20 Summit last weekend had given a breather to the global markets. Though nothing exceptional was expected out of the Trump-Xi meeting, the fact that both the countries were ready to engage in a dialogue was seen as a positive sign.
US markets surged on Monday, led by Chinese and semiconductor stocks. However, in the following days, numerous critics had started expressed skepticism overreaching a permanent resolution.
Given this geopolitical scenario, the recent arrest of Huawei CFO Meng Wangzhou by Canada for allegedly violating trade sanctions is more than just a private-company affair. According to Canadian officials, the arrest was made on a request by the US, which has asked for her extradition.
The episode could now turn out to be the final nail in the coffin in the US-China spat.
Huawei is China’s tech darling, and the Asian country is not taking the arrest lightly. Calling the arrest a human rights violation, Chinese media is already depicting the incident as an open attack on Huawei. Backing this theory, various media houses point out how the US has been asking its allies, including New Zealand, Australia, and most recently the UK, to boycott Huawei products.
In a statement released on Thursday, Chinese Embassy in Canada said, “The Chinese side has lodged stern representations with the US and Canadian side and urged them to immediately correct the wrongdoing and restore the personal freedom of Ms. Meng Wanzhou.”
Trump effect and trade war: Markets slip on unclear China-US deal negotiations
Similarly, the US had earlier banned domestic suppliers from selling to Chinese telecommunications firm, alleging that the company violated trade sanctions that were imposed on Iran. Huawei was also being probed under similar charges, but it is not yet clear if the arrest is related to this allegation.
Semiconductor stocks around the globe tumbled on Thursday fearing that the crisis could escalate to unprecedented levels. In the US, Qualcomm (QCOM) was down 2.2%, Broadcom down 2.7%, Intel (INTC) down 1.4% and Nvidia (NVDA) was down 1.2% during intra-day trading on Thursday.