China raised tariffs by up to 25 percent on 128 products from frozen pork and wine to certain fruits and nuts. Soon after the announcement, an editorial in the widely read Global Times newspaper warned that if the United States had thought China would not retaliate or would only take symbolic counter-measures, it could "say goodbye to that delusion."

The measure drove traders to sell risky assets and seek protection on the US dollar. Currency markets in Mexico, itself embroiled in thorny trade negotiations with US President Donald Trump's administration, were among the most affected.

The peso "will need some positive news from NAFTA negotiations in April and a change in the trend in presidential polls, to make inroads to below 18.00 (pesos to the dollar), otherwise, we may see ourselves looking at 19.00 again," strategists at Continuum Economics wrote in a client note.

The peso was down 0.8 percent to 18.3 to the dollar, leading losses among Latin American currencies.

Volumes were thin in the region as traders returned from the holiday-lengthened weekend.

Local factors drove some gains in stock markets, though risk-aversion curbed the advance. Brazil's benchmark Bovespa stock index inched up 0.1 percent as shares of miner Vale SA jumped on the heels of a new dividend policy.

Meatpacker BRF SA also rose as traders bet it could benefit from China's tariffs on US pork exports.