Asian markets sank Monday as investors juggle a number of negative issues that have fuelled worries about the global outlook.
On Sunday, China summoned the US ambassador to protest at the arrest of top Huawei executive Meng Wanzhou in Canada last week over allegations of fraud linked to the breaking of Iran sanctions.
An angry China has demanded Washington drop its extradition request, as investors fret that the arrest could throw a spanner in the works of a fragile trade war truce between Beijing and Washington.
"Huawei... will likely remain in the headlines for some time as China continues to pressure both Canada and US to withdraw charges," said Stephen Innes, head of Asia-Pacific trade at OANDA.
"It's more than apparent that US-China tensions are well beyond trade. And when combined with the fact 'tariffs-limbo' is likely to extend well into 2019, uncertainty is expected to remain high, and could still explode into a full-blown trade war."
Still, US Trade Representative Robert Lighthizer said he did not expect the arrest to disrupt the talks.
Lighthizer, the man leading trade negotiations with China, also said he did not expect to see an extension past the March 1 deadline for a deal between the world's top two economies.
Donald Trump and Xi Jinping agreed at the G20 this month to a 90-day ceasefire in the multi-billion-dollar tariffs row that will allow officials to find a resolution. A threatened hike in levies on Chinese imports will be imposed if no agreement is reached.
Equity markets, which have been buffeted by the trade row this year -- and were hammered by the arrest last week -- were down on Monday, tracking heavy losses in New York.