• China warned the U.S. on Thursday against further harming trade ties after President Donald Trump effectively barred Chinese telecom giant Huawei from the U.S. market, escalating tensions between the world’s top economic powerhouses.
• At the same time, Beijing’s diplomatic relations with Ottawa further soured as China formally arrested two Canadians on suspicion of snatching state secrets in a case seen as retaliation over Canada’s arrest of a Huawei executive on a U.S. extradition request.

BACKGROUND:

• The spat over Huawei adds to the uncertainty over efforts to revive a deal that would end a bruising U.S.-China trade war after the two sides hiked tariffs n recent days.
• Trump stepped up the U.S. battle against Huawei on Wednesday when he signed an executive order prohibiting the purchase or use of equipment from companies that pose “an unacceptable risk to the national security of the United States” or the safety of the American people. While the White House insisted that no particular country or company was targeted, Huawei is likely to be hit by the move amid concerns that its equipment could be used by Chinese intelligence services.
• The U.S. Commerce Department followed up with a more direct hit on the tech giant, adding it to a blacklist that will make it much harder for the firm to use crucial U.S. components in its array of phones, telecom gear, databases and other electronics.