Tokyo stocks slipped Tuesday as exporters were hit by a yen rally, fuelled by concerns over President Donald Trump's global trade plans and comments from his Treasury Secretary pick over a stronger dollar. Trump followed up an inauguration speech seen as angry and protectionist by making his first official act the withdrawal from the 12-nation Trans-Pacific Partnership (TPP).
He also said he would renegotiate the North American Free Trade Agreement with Canada and Mexico and threaten to impose border taxes, while his chief spokesman warned he would not hesitate to confront Beijing the South China Sea issue.
"If protectionism increases, companies that have been operating on the assumption of free trade until now will have to rethink their policies," said Toshihiko Matsuno, a senior strategist at SMBC Friend Securities.
"The market is afraid that if President Trump further intensifies his protectionist colours with border taxes, the global economy will start shrinking," he told Bloomberg News.
The benchmark Nikkei 225 index fell 0.55 percent, or 103.04 points, to close at 18,787.99, while the Topix index of all first-section issues lost 0.55 percent, or 8.30 points, to 1,506.33.
Investors cheered Trump's November election, hoping he would pursue pro-growth measures such as public works spending, lower taxes and regulatory reforms. The tycoon confirmed on Monday he plans to pursue those priorities, but markets are growing concerned about his lack of detail and the possibility his tough talk will lead to a trade war.
Japan's Prime Minister Shinzo Abe, who made the TPP a key part of his economic growth drive, said Tokyo would keep pressing the US on the merits of the agreement.
Toyota dropped 1.65 percent to 6,579 yen and Honda shed 1.66 percent to 3,375 yen.
Toshiba fell 3.38 percent to 259.8 yen while market heavyweight Fast Retailing, the operator of Uniqlo clothing chain, sank 2.72 percent at 35,350 yen.
Takata dived 5.99 percent to 439 yen, a seventh straight loss that has seen its market value more than halved over fears of a lengthy bankruptcy restructuring for the airbag maker at the centre of the biggest-ever auto safety recall.
Mitsubishi Heavy Industries fell 1.64 percent to 515.5 yen, extending the previous day's losses after it postponed delivery of its long-awaited regional jet by two years and warned over soaring development costs for the problem-plagued plane.
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