A report that said Michael Flynn was directed by President Donald Trump to talk to Russians couldn't have come at a more "delicate time," closely followed trader Art Cashin told CNBC on Friday.

The Dow Jones industrial average plummeted on Friday after The Associated Press and ABC News reported that Flynn, Trump's former national security advisor, would testify that he was directed to make contact with the Russians. That came after news that Flynn pleaded guilty to lying to the FBI about his postelection contacts with Russia's ambassador to the U.S.

"While we don't exactly know what the relationship with the president is, this comes at a very, very delicate time," said Cashin, UBS director of floor operations at the New York Stock Exchange. "We're just about to vote on the tax bill."

Earlier Friday, Senate Republicans said they were confident they had the votes needed to pass their tax overhaul. The GOP had delayed voting on their bill late Thursday amid disagreements on certain items.

"You have a couple of senators that are not necessarily persuaded. They may say, 'Wait a minute. If Trump was OK and everything was alright, yeah OK here's what I'll do.' But now it's maybe I don't want to be associated with this thing," Cashin told "Squawk Alley."

Now, "everything is up in the air," Cashin added.

He also agreed that the market's reaction to the Trump-Flynn news was dramatic, saying, "It was a combination of two things."

"There was some protective selling that rushed in," Cashin said. "It was also a massive cancellation of bids. You people [say] 'I don't want to buy them here. I want to step back and think clearer. And so you had selling going into a vacuum and that's what made it so dramatic."

"These are uncertain times," he added.