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Photo: Steve Parsons/PA Images via Getty Images

The broad trajectory of the stock market last week can be explained pretty simply.

What happened: A Monday spike on optimism about a trade truce between China and America, followed by a downward spiral after news emerged that seemed to indicate the trade war continues to be prosecuted aggressively.

  • Meng Wanzhou, the CFO of Chinese telco Huawei, appeared in a high-security Vancouver courtroom Friday, facing extradition to the U.S. on fraud charges.
  • China came to Huawei's defense, with state media saying that the U.S. was behaving like a "despicable rogue." China is treating this as an attack by one sovereign on another.
  • Huawei, which made $7 billion last year on revenues of $19 billion, has been effectively banned from selling many of its products in the U.S., Australia and New Zealand.

Canada won't arrest and extradite foreign citizens for violating U.S. sanctions, but it will arrest and extradite foreign citizens for committing fraud. Meng was arrested on the basis of a 2013 PowerPoint presentation she made to HSBC, in which she said there was no relationship between Huawei and Skycom, which was doing business in Iran. That statement, if untrue, can be seen as an attempt to fraudulently mislead HSBC.

  • These kind of arrests are rare, but far from unheard-of. America is well-versed in using international criminal law to advance its foreign policy, and directors of foreign companies are often caught complainingthat the U.S. should not be able to prosecute actions taken abroad that were entirely legal in the place where they happened.
  • The timing of Meng's arrest could hardly have been worse. It's pure coincidence that Meng was arrested on the same day that Trump had his friendly dinner with Chinese President Xi Jinping. Now all of that goodwill seems like a thing of the distant past.

The big question: "The Justice department and the Trump administration have an important question to answer: What do we want out of this?" writes Bloomberg's Tim Culpan. "It’s not clear that they know."

The bottom line: Meng's fate could have multitrillion-dollar geopolitical implications, especially if China retaliates by arresting American executives. For the time being, however, the trade talks are still on.

Go deeper: Canada tumbles into the middle of the U.S.-China trade war.

Go deeper

Tim Scott hopes to reintroduce version of GOP police reform bill

Photo: Stefani Reynolds/Bloomberg via Getty Images

Sen. Tim Scott (R-S.C.) told reporters Wednesday he plans to reintroduce his police reform bill or a similar proposal in the coming weeks and that he has discussed a potential compromise with Rep. Karen Bass (D-Calif.) and Sen. Cory Booker (D-N.J.).

Why it matters: Eyes have again turned to Washington to take steps to address police reform in the wake of Derek Chauvin's guilty verdict Tuesday, after efforts stalled in Congress last year.

Biden announces small business tax credits for vaccine PTO

Photo: Doug Mills/The New York Times/Bloomberg via Getty Images

President Biden on Wednesday called on all employers to provide workers paid time off to get vaccinated or recover from COVID side effects, and said he'll include a paid tax credit for small businesses that do so.

Why it matters: The Biden administration sees workplaces as highly influential in making shots more convenient for working adults who are in high-risk industries.

White House unveils plans for high-profile climate summit

Illustration: Aïda Amer/Axios

The Biden administration offered new details this morning about the big, virtual climate summit Thursday and Friday and signaled they expect new emissions reduction and climate finance commitments from multiple countries.

Driving the news: The administration said 40 heads of state would attend, including Russian President Vladimir Putin and President Jair Bolsonaro of Brazil.