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 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.