Tokyo is hoping to avoid falling into the firing line after U.S. President Donald Trump followed through on his campaign promise to impose steep tariffs on three trading partners.

Markets are still pinning their hopes on the art of the deal. Stocks may have fallen on Monday as investors digested U.S. President Donald Trump’s decision to whack tariffs on Mexico, Canada and China,

Japanese shares ended lower as risk-aversion gathered steam following President Trump's decision to impose tariffs on Canada, Mexico, and China. The Nikkei Stock Average finished 2.7% lower at 38520.09.

Japanese stocks plunged, with the Nikkei average losing almost 3% at one point, after President Donald Trump slapped tariffs on the United States’ top three trade partners, threatening major economic disruption.

Japanese auto stocks fell sharply after new U.S. tariffs against Mexico, Canada and China raised concerns about their U.S. sales of cars made in the North American trading partners and a further escalation in trade conflicts.

Policymakers, investors and economists are watching Trump’s trade policy amid fears that his threatened use of tariffs could batter global commerce.

Japanese automakers’ shares tumbled after US President Donald Trump pledged to impose tariffs against Canada and Mexico, with investors worried their operations may be upended considering many have factories south of the border from where they send cars into North America.

As President Donald Trump threatens to impose his first tranche of tariffs on the world Saturday, Chinese manufacturers are bracing for impact.

Japan intends to closely monitor the impact on its currency of US President Donald Trump’s new tariffs and is worried about the international fallout from the trade imposts, Finance Minister Katsunobu Kato said.

Trump has threatened a 10% levy from 1 February - but his campaign included 60% tariffs against Chinese imports.