Transcript for Tension grows between China and US after arrest of Chinese CFO

Erielle, thank you. We turn to China's new threat, possibly adding to the turmoil in America's already volatile stock market. China's ambassador outraged, and threatening to escalate the trade war. Here's Stephanie Ramos. Reporter: All eyes now focused on a very jittery market. And the growing tensions with China are not likely to help. China is outraged over the detention of tech cfo meng wanzhou, calling it "Extremely egregious," demanding the U.S. Cancel her arrest order or face further action. Wanzou was arrested in Canada on December 1st at the request of the U.S. She is accused of using her tech company to cover up sanction violations with Iran. The trade war battle and tensions over wanzou's arrest sent the Dow plummeting more than 1,500 points, a 6% drop since its high on Monday. We keep having rhetoric go back and forth, U.S., China, who's flexing their muscles more, and the unknown of how this is all going to play out is weighing in on our markets. Reporter: Wanzou is the daughter of the founder of the huawei company, China's largest cell phone maker. In the past, they have been accused of using the phones for spying, a charge huawei denies. It's frightening that any one of those cell phones can have a listening device for the Chinese government. Reporter: The fear now, the detainment could derail the already tense tariff negotiations as the deadline looms. At the end of 90 days, these tariffs will be raised on $200 billion from 10% to 25%, if we don't get a satisfactory solution. Reporter: China is demanding the U.S. Ambassador challenge the arrest of wanzhou. She will appear in court tomorrow, and is expected to be extradited to the U.S. Tom? Stephanie, thank you.

This transcript has been automatically generated and may not be 100% accurate.