A top executive and daughter of the founder of Chinese telecom giant Huawei has been arrested in Canada and faces extradition to the United States.
The move has angered China and comes just days into a trade war truce with the US.
The detention of Meng Wanzhou, Huawei's chief financial officer, comes after US authorities reportedly launched an investigation into suspected Iran sanctions violations by Huawei.
The company was already under scrutiny by US intelligence officials who deemed the company a national security threat.
The arrest has led to tension just as the US and China agreed to a ceasefire in their trade spat while negotiators seek a deal within three months.
News of her detention rippled through stock markets in Asia, particularly Shanghai and Hong Kong, with tech firms among the worst hit.
Ms Meng was arrested in the western city of Vancouver on 1 December, Canada's ministry of justice said in a statement.
The ministry said the US is seeking her extradition and she faces a bail hearing tomorrow.
It said it could not provide further details due to a publication ban that was sought by Ms Meng, whose father, Huawei founder Ren Zhengfei, is a former Chinese People's Liberation Army engineer.
The arrest occurred on the same day that US President Donald Trump and Chinese President Xi Jinping struck the trade war truce at a summit in Argentina.
China's embassy in Ottawa demanded Ms Meng's release.
"The Chinese side firmly opposes and strongly protests over such kind of actions which seriously harmed the human rights of the victim," the embassy said in a statement.
"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."
Huawei said it was unaware of any wrongdoing by Ms Meng and was provided "very little information" about the charges.
"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 EU," the company said in a statement.
"China is working creatively to undermine our national security interests, and the United States and our allies can't sit on the sidelines," US Senator Ben Sasse in a statement linking the arrest to US sanctions against Iran.
"Sometimes Chinese aggression is explicitly state-sponsored and sometimes it's laundered through many of Beijing's so-called 'private' sector entities that are in bed with Xi's communist party," he added.
The Wall Street Journal reported in April that US Department of Justice had opened an investigation into suspected violations of Iran sanctions by Huawei.
The New York Times said the company had been subpoenaed by the Commerce and Treasury Departments over alleged violations of Iran and North Korea sanctions.
Huawei is not the first Chinese telecoms equipment firm to face the ire of US authorities.
Earlier this year, the US imposed a seven-year ban on the sale of crucial US 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.
The ban nearly killed the Chinese tech company, which said it was forced to cease major operations in May.
A month later, the US and China reached a deal that would strike ZTE from the sanctions list.
It came just days after China reportedly offered to ramp up purchases of American goods to help cut the yawning trade imbalance with the US. American officials denied any connection between the two.