The benchmark Nikkei 225 index lost 1.51 percent or 323.94 points to 21,064.64 in early trade while the broader Topix index was down 1.25 percent or 21.41 points at 1,687.37.
"We expect Japanese stocks to fall sharply again today," Okasan Online Securities said in a commentary.
"Selling will prevail due to drops in US stocks and the strong yen," it said.
Wall Street stocks plunged Monday as weakness in technology shares sparked a broader sell-off amid rising fears of a trade war with China.
Those anxieties were back in focus Monday after China slapped retaliatory tariffs on 128 US exports, including 25 percent on pork products and recycled aluminium.
The tech slump dented sentiment by clouding the long-term prospects of some of the market's biggest stars.
Amazon sank 5.2 percent after a series of attacks by President Donald Trump in recent days in which he accused the retailer of profiteering at the expense of the US Postal Service.
Against the unsettling background, "the yen has re-emerged as the weapon of choice," David de Garis, director of economics and markets at National Australia Bank, said in a commentary.
The dollar fell to 105.76 yen from 106.29 yen in Asian trade on Monday afternoon.
A stronger yen often drags the Japanese stocks market down as it
Nintendo tumbled 3.12 percent to 46,230 yen and Toyota was down 1.00 percent to 6,711 yen. Sony lost 1.10 percent to 5,116 yen.
Japan's top e-commerce firm Rakuten fell 1.92 percent to 864.6 yen while mobile carrier and IT investor SoftBank Group fell 1.84 percent to 7,718 yen. DM