The Shanghai Composite index fell 1.2% to 2,903.71. Japan's Nikkei 225 index gave up 0.7% to 21,191.28 and Australia's S&P ASX 200 declined 0.2% to 6,297.60. South Korea's Kospi fell 1.4% to 2,079.01. Hong Kong's markets were closed for a holiday. Shares fell in Taiwan and most of Southeast Asia.
U.S. stocks looked set for losses, with the future contract for both the Dow Jones Industrial Average and the S&P 500 down 1.2%. China's head envoy to last week's trade talks, Vice Premier Liu He, said before leaving Washington on Friday that Beijing would not compromise on matters of principle and that tariffs on Chinese exports to the U.S. should be lifted as a condition for striking a deal.
But Liu downplayed the level of tensions, saying China could cope with the challenges posed by the trade dispute. China said it will retaliate after the U.S. raised tariffs on $200 billion of its exports as of Friday to 25% from 10%, but had not said how.
President Donald Trump said on Twitter over the weekend that "We are right where we want to be with China." He accused China of "ripping off" America. The Trump administration said it was preparing to expand 25% tariffs to another $300 billion worth of Chinese goods, or practically all imports from China.
The tariffs war has been hammering Chinese manufacturers and is an added drag on growth for the region. "The lack of resolution in the latest U.S.-China trade talks coupled with continued provocative tweets from President Trump provides no relief for risk sentiment as we look to another weak start to the week for Asia markets," Jingyi Pan of IG said in a commentary.
On Friday, a late-day rally spurred by upbeat comments by U.S. officials pulled markets higher after an early slump triggered by the escalation in the trade war. The S&P 500 index rose 0.4% to 2,881.40. The broad index is still up 14.9% for the year. The Dow Jones Industrial Average also gained 0.4%, to 25,942.37. The Nasdaq added 0.1% to 7,916.94, while the Russell 2000 index of small company stocks picked up 0.2% to 1,572.99. Major indexes in Europe closed mostly higher.
The yield on the 10-year Treasury note fell to 2.44% from 2.47% late Friday. The higher tariffs from the U.S. and China's response that it would take "necessary countermeasures" rattled investors Friday who had been hoping for a quick resolution to the dispute. Confidence in that outcome had eased investors' concerns this year, along with a more patient Federal Reserve and solid economic data.
"Further trade talks cannot remedy the sharply increased uncertainty over Chinese and regional growth," Mizuho Bank said in a report. "Meanwhile, the escalation in tariffs is also likely to undermine the global growth outlook (and) create more acute pressures on global equities," it said.
ENERGY: U.S. benchmark crude oil added 1 cent to $61.67 per barrel in electronic trading on the New York Mercantile Exchange. It lost 3 cents to $61.70 on Friday. Brent crude, the international standard, gained 24 cents to $70.86 per barrel.
CURRENCIES: The dollar slipped to 109.77 Japanese yen from 109.96 yen on Friday. The euro was flat at $1.1231.