Less than two weeks after moving back into the White House the US president on Saturday made good on warnings that he would resume his hardball tactics, sparking fears of trade wars that could hammer the global economy.
The move will see 25 percent levies on imports from Canada and Mexico and 10 percent duties on Chinese goods.
Analysts at Oxford Economics said the tariffs could see Mexican inflation surge to six percent annually, from 4.2 percent in December, while the peso sank seven percent.
Chief EY economist Gregory Daco said Canada's economy could shrink 2.7 percent this year and 4.3 percent next year.
White House Press Secretary Karoline Leavitt said tariffs were "promises made and promises kept by the president".
Canada said it would file a World Trade Organization claim against the United States, while Mexican President Claudia Sheinbaum announced that retaliatory tariffs would be imposed on US products.
China's trade ministry said Beijing would take "corresponding countermeasures".
While the decision had been well-flagged, equity markets took a hefty hit, with all three main indexes on Wall Street turning negative at the end of Friday trade after Trump reaffirmed he would impose the tariffs.
In Asia, the Year of the Snake started with a nasty bite.
Tokyo, Seoul and Jakarta each shed more than two percent while Sydney, Bangkok and Wellington were each off more than one percent. Hong Kong pared early losses but remained in the red along with Singapore and India.
- Investors 'feel jolt' -
Taipei plunged more than three percent, with chip titan and market-heavyweight TSMC diving 5.7 percent on the first day of trade since China's DeepSeek unveiled a cheaper artificial intelligence model rivalling those of US tech giants.
"This wasn't a shock -- it's been telegraphed for weeks -- but investors will still feel the jolt as markets adjust to a move almost universally seen as damaging to global growth and financial stability," said Stephen Innes at SPI Asset Management.
On currency markets the dollar soared 2.3 percent against the Mexican peso and more than one percent against the Canadian dollar.
It was also sharply higher against the South Korean won, Australian dollar and South African rand.
"We suspect the path of least resistance for now is for Asian currencies and risk assets to weaken, together with a greater risk premia to account for future meaningful tariff moves beyond what we have seen," said Michael Wan at MUFG.
Gold slipped, having hit a fresh record above $2,800 last week, as the stronger dollar made it more expensive to buy the metal for holders of other currencies.
Trump's latest salvo came at the end of a volatile week for markets following news of DeepSeek's R1 chatbot, which saw some investors re-evaluate their surge into tech giants in recent years as they bet big on the AI revolution.
It also overshadowed healthy earnings results from Apple, which soothed some worries about the tech sector, and data showing that the Federal Reserve's preferred gauge of inflation met forecasts.
Oil prices jumped as Trump's tariffs on Canada and Mexico include the commodity, while Bitcoin dropped more than five percent.
- Key figures around 0700 GMT -
Tokyo - Nikkei 225: DOWN 2.7 percent at 38,520.09 (close)
Hong Kong - Hang Seng Index: DOWN 0.4 percent at 20,142.64
Shanghai - Composite: Closed for a holiday
Euro/dollar: DOWN at $1.0251 from $1.0363 on Friday
Pound/dollar: DOWN at $1.2290 from $1.2392
Dollar/yen: UP at 155.39 yen from 155.18 yen
Euro/pound: DOWN at 83.38 pence from 83.59 pence
West Texas Intermediate: UP 1.9 percent at $73.92 per barrel
Brent North Sea Crude: UP 1.0 percent at $76.43 per barrel
New York - Dow: DOWN 0.8 percent at 44,544.66 (close)
London - FTSE 100: UP 0.3 percent at 8,673.96 (close)
dan/mtp
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