Meng Wanzhou, the daughter of the Huawei's founder and a top executive widely believed to be in line to lead the company, is reported to be facing extradition to the United States for allegedly violating US sanctions against Iran.
He also said the USA government has been "concerned" about Huawei potentially stealing American intellectual property - an issue that's been a centerpiece of the U.S-China trade disputes.
Meng's bail hearing has been scheduled for Friday. Meng reportedly faces extradition to the US for allegedly violating American sanctions against Iran.
The Wall Street Journal reported in April that US Department of Justice had opened an investigation into suspected violations of Iran sanctions by Huawei. He said arresting her without that violated her human rights.
Huawei is one of the world's largest telecommunications equipment and services providers.
A month later, Washington and Beijing reached a deal that would strike ZTE from the sanctions list - just days after China reportedly offered to ramp up purchases of American goods to reduce the trade imbalance with the US.
The U.S. sees Huawei and smaller Chinese tech suppliers as possible fronts for spying and as commercial competitors.
"The U.S. has been telling its allies not to use Huawei products for security reasons and is likely to continue to put pressure on its allies", said Norihiro Fujito, chief investment strategist at Mitsubishi UFJ Morgan Stanley Securities.
One of the most high-profile legal battles involving foreign executives occurred in 2013, when China investigated United Kingdom drugmaker GlaxoSmithKline over suspected bribery.
A US Justice Department spokesman declined to comment.
"It has been clear for some time that Huawei, like ZTE, poses a threat to our national security", he said.
"Recently, our corporate CFO, Ms. Meng Wanzhou, was provisionally detained by the Canadian Authorities on behalf of the United States of America, which seeks the extradition of Ms. Meng Wanzhou to face unspecified charges in the Eastern District of NY, when she was transferring flights in Canada", the statement reads.
The arrest is related to violations of U.S. sanctions, a person familiar with the matter said.
National security adviser John Bolton did not know about the arrest of a top Chinese telecommunications executive before President Trump met with Chinese President Xi Jinping at the G-20 summit in Argentina, a spokesperson for Bolton told CBS News.
While Meng's arrest comes at a delicate time in U.S. "The potential slowdown in global growth is also something the markets are pricing in".
Huawei said in a statement about Meng's arrest that it "has been provided very little information regarding the charges and is not aware of any wrongdoing by Ms. Meng".
Traders said the development smashed hopes surrounding the trade war ceasefire announced by President Trump after talks with his Chinese counterpart at the weekend.
Huawei also said in a statement that it was compliant with "all applicable laws and regulations where it operates". But American officials also worry more broadly about Chinese plans for state-led industry development they worry might erode USA industrial leadership.
USA media have reported that Huawei is under investigation for potential violations of U.S. sanctions against Iran.
Gordon Houlden, director of the China Institute at the University of Alberta, said Canada and the US have an extradition treaty and Canada has obligations that not even the prime minister can change.
Is the arrest of Meng Wanzhou related to these security concerns?
"It suggests that Iran sanctions remains a high priority for enforcement by the administration", said Currie, who is a partner at Crowell & Moring.