US telecommunications firms fear that partnering with Huawei by allowing it to sell their smartphones would anger the federal government and jeopardize future contracts.
The arrest is related to violations of US sanctions, a person familiar with the matter said, though officials have so far stayed mum on her allegations.
The detention of Ms Meng threatens to scuttle the temporary detente reached by US President Donald Trump and his Chinese counterpart Xi Jinping at the G20 talks in Argentina to halt new trade tariffs for 90 days as the two countries negotiate. It appears that the arrest is likely in connection to an ongoing USA investigation into Huawei allegedly violating global sanctions against Iran and North Korea.
Chinese business executive Meng Wanzhou was detained by Canadian authorities and faces extradition to the United States in a move that Beijing slammed as violating her "human rights".
The SCMP obtained a transcript of an internal question-and-answer between Meng and her father, Huawei's founder Ren Zhengfei.
As reported by Bloomberg, tensions are back on the rise between the USA and China following the Canadian arrest of Huawei's global CFO, who is set to be extradited to the United States to face charges of violating Iran sanctions.
Huawei is among China's most influential firms, with revenue of roughly $92 billion in 2017 alone, according to Reuters.
Meanwhile, a clerk at the B.C. Supreme Court says Meng appeared in court Wednesday and a bail hearing is scheduled for Friday.More news: Trade Talks With China To End On March 1 Unless Extended
What has Canada said about the arrest?
"Huawei is not aware of any misconduct by Ms. Meng", said Huawei's CEO in a statement posted to WeChat, China's most popular communications app. "Huawei complies with all applicable laws and regulations where it operates, including applicable export control and sanction laws and regulations of the UN, US and European Union", the firm said in a statement. Combine Apple, Cisco, and Booz Allen, and then imagine this company working very closely with the US government, and you get a better sense of the significance of the company to China.
The Wall Street Journal reported last month that U.S. officials had briefed counterparts in countries including Germany, Japan and Italy on potential security risks from Huawei equipment.
Meng's arrested caused global markets to tumble and prompted a stern response from China, which has demanded her immediate release. In a report released by the U.S. Permanent Select Committee on Intelligence in 2012, Huawei and ZTE Corp. were tagged as potential threats to U.S. security interests.
The US sees Huawei and smaller Chinese tech suppliers as possible fronts for spying and as commercial competitors.
United States stock futures took a sharp move downward, a sign that the global stock rout is set to continue amid heightened trade war fears after the US-led arrest of a Chinese executive.
Despite being essentially barred from the critical U.S. market, Huawei surpassed Apple to become the world's number two smartphone maker in the second quarter of this year.
US Senator Ben Sasse praised the move and said that it was "for breaking US sanctions against Iran".
Huawei is one of the world's largest telecommunications equipment and services providers.
Huawei, for its part, has denied sharing information with the Chinese government, as has ZTE. Finance Minister Bill Morneau was recently in Beijing for meetings in which "the two sides reaffirmed their commitment to deepening and expanding the Canada-China economic and trade relationship".