Walmart (NYSE:WMT) is a perfect example of how one month in these volatile markets can seemingly change everything. From mid-October to Nov. 9, Walmart stock catapulted almost 13%. But in the trailing one-month period, WMT has given up all those gains. Additionally, further volatility is not out of the question.

In so doing, WMT stock has essentially matched the Dow Jones during this period. And what was the rest of Wall Street so worried about? The answer of course is China. Prior to President Donald Trump sitting down with Chinese President Xi Jinping at the G20 summit, most analysts feared the worst.

The escalating trade war has consumed investor focus throughout this year. More critically, the Trump administration is a firebrand. You never know what you’re going to get, but it probably won’t be diplomatic. So it was a welcome surprise that the two leaders agreed to temporarily call it a truce.

The level-headed approach briefly bolstered the Street. Walmart stock experienced a noticeable bump-up, as did rival big-box retailers Target (NYSE:TGT) and Best Buy (NYSE:BBY).

However, the bears quickly extinguished the optimism like sirens on a frat party. The reality set in that the truce was most definitely transient. Trump being Trump, he made lavish boasts. The Chinese government remained silent as bigly albeit confusing promises proliferated throughout Twitter’s (NYSE:TWTR) social-media network.

Now, whatever goodwill that the White House generated is in dire straits. Just recently, news agencies reported that Canadian authorities arrested Meng Wanzhou, CFO of Chinese tech firm Huawei. The U.S. Justice Department has sought her arrest as part of an ongoing investigation. As a result, Meng faces extradition to the U.S.

Walmart Stock Risks Crossfire

On the surface and without context, a Chinese tech firm and its leadership controversies should have little to do with Walmart stock. But for a retailer which has aspirations for world domination, the CFO arrest is the last thing it needs.

For one thing, China has angrily demanded that authorities release Meng. Naturally, if this situation escalates, WMT stock risks geopolitical crossfire. It’s very likely that the Chinese government will use the upcoming trade negotiations as leverage. Should a trade deal not materialize, the Trump administration is prepared to raise tariffs dramatically, driving up costs for cheaply manufactured goods.

That’s not going to do any favors for Walmart’s financials, which are driven by volume, not margins. This explains why Target shares, which also depends on pushing low-cost inventory out the door, have also struggled.

Even worse, China has directly warned Canada, which is currently holding Meng, to “immediately correct the mistake.” This upfront, no-nonsense language suggests that the issue has rattled Chinese policymakers. It also indicates friction with another important Chinese economic partner.

According to the company’s website, WMT has more than 400 stores located in Canada, serving 1.2 million customers daily. Given Canada’s 37 million residents, that’s a sizable presence. Therefore, Walmart stock is unlikely to remain unaffected if China retaliates against Canada over the Huawei controversy.

As if the big-box retailer needed more pressure, it’s struggling badly in Japan. Walmart attracted unwanted headlines earlier this year when the Nikkei Asian Review reported that management was seeking to dump its Japanese subsidiary, Seiyu. The leadership quickly denied the reports, but the message was clear: Walmart is not invincible.

Again, it also means that WMT stock can’t ignore geopolitical headwinds.

However, Don’t Overreact on WMT Stock

While the implications over the CFO arrest are mostly negative, it’s worth reminding that the Asian markets haven’t panicked yet. In addition, this controversy is an opportunity for the Trump administration to score a landmark victory. Let me explain.

In pushing the “America First” agenda, the president emphasized that he will level the playing field with our international partners. Priority number one is to ensure that everybody plays by the same rules. Trump has repeatedly asserted that China skirts the rules.

It’s important to note why the Justice Department sought Meng’s arrest. They allege that Huawei evaded U.S. sanctions on Iran by shipping American-made products to the Islamic republic. If so, it confirms the Trump administration’s suspicions about shady Chinese business practices.

More importantly, in order for a trade agreement to have legitimacy, all parties must respect the rule of law. And whether you support the president or not, it’s his administration’s responsibility to ensure that American contracts are respected.

In the long run, I wouldn’t panic on WMT stock. The nearer-term picture is unpredictable, but our government must protect its own interests. For once, Trump is just doing his job.

As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities.