@Sarah4233 No, you don't cancel. Hosts receive penalties for cancelling.
Tell her she needs to cancel from her end. She needs to cancel by contacting Airbnb, telling them she has a positive Covid test (supposedly guests have to provide Airbnb with the documention), and they will refund her. A positive Covid test is covered under the Extenuating Circumstances policy.
And this guest is being outrageously rude- what, if she doesn't get a full refund she would plan to come to your home with her Covid?