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 fell, dragging the benchmark Topix down more than 2%, as fears of global trade war spurred widespread selling in exporters such as technology companies and automakers.

U.S. equity futures tumbled in early Monday trading, while energy prices leaped and the dollar soared to a two-year high against its currency peers as markets reacted to the weekend tariff announcements of President Donald Trump and their potential to trigger a global trade war.

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

Investors braced for a potential trade war after Trump imposed tariffs on goods from Canada, Mexico and China and pledged future tariffs on the European Union.

The German and French stock markets were down about 2%, with shares in carmakers among the worst hit, while London's FTSE 100 dropped more 1%. The US dollar also strengthened on the currency markets,

Global shares are mostly declining as worries grow about President Donald Trump imposing tariffs on key U.S. trading partners

Asia's factory activity weakened in January as soft Chinese demand and threats of higher tariffs by U.S. President Donald Trump weighed on business sentiment, private surveys showed on Monday, darkening the outlook for the region's economy.

Canada and Mexico have said that they will hit back with retaliatory tariffs while China promised "corresponding countermeasures" and vowed to challenge Trump's move at the World Trade Organization. Trump has said the tariffs are necessary to halt the flow of illegal drugs and immigration into the US.

Asian stocks plunge as Trump’s tariffs spook markets Stock markets in Asia dropped on Monday after US tariffs on China, Canada and Mexico triggered fears of a hit to global growth. Japan's Nikkei index tumbled as much as 2.