The US dollar shot to a record peak against the Chinese yuan in offshore trading, its highest against Canada's currency since 2003 and the strongest against the Mexican peso since 2022.

Japan's Nikkei share average tumbled 2.9 percent and Australia's benchmark - often a proxy trade for Chinese markets - dropped 1.8 percent.

Stocks in Hong Kong, which include listings of Chinese companies, fell 1.1 percent upon reopening from Lunar New Year holidays. Mainland Chinese markets resume trading following the holidays on Wednesday.

Pan-European STOXX 50 futures sank 2.7 percent, and US S&P 500 futures dropped 2 percent.

Trump slapped Canada and Mexico with duties of 25 percent and China with a 10 percent levy at the weekend, calling them necessary to combat the flow of migrants and fentanyl into the US.

Canada and Mexico immediately vowed retaliatory measures, and China said it would challenge Trump's levies at the World Trade Organization.

The tariffs, outlined in three executive orders, are due to take effect at 05:01 GMT on Tuesday.

Trump's move was the first strike in what could usher in a destructive global trade war and drive a surge in US inflation that would "come even faster and be larger than we initially expected," said Paul Ashworth of Capital Economics.

A model gauging the economic impact of Trump's tariff plan from EY chief economist Greg Daco suggests it would reduce US economic growth by 1.5 percentage points this year, throw Canada and Mexico into recession and usher in "stagflation" at home.

Barclays strategists previously estimated that the tariffs could create a 2.8 percent drag on S&P 500 company earnings, including the projected fallout from retaliatory measures from the targeted countries.

The US dollar rose as much as 0.8 percent to reach an all-time high of 7.3765 yuan in the offshore market. Onshore trading remains shut for holidays.

The US currency climbed as much as 2.8 percent to 21.2547 Mexican pesos, the highest since March 2022, and rose as much as 1.4 percent to C$1.4755, a level not seen since 2003.

The euro dropped as much as 2.3 percent to $1.0125 - the lowest level since November 2022. Trump said at the weekend that tariffs on Europe will "definitely happen".

US two-year Treasury yields rose as much as 3.6 basis points to 4.274 percent, a one-week high, on concerns tariffs will stoke US inflation and delay Federal Reserve interest-rate cuts.

Two-year Japanese government bond yields rose in sympathy, reaching their highest levels since October 2008.

Leading cryptocurrency bitcoin tumbled to as low as $91,439.89, a three-week trough.

Oil prices rose, with US Texas Intermediate crude up 1.9 percent at $73.89 a barrel and Brent crude futures adding 1 percent to $76.39 a barrel as investors tried to gauge the impact of Trump's tariffs on world energy.