NEW YORK CITY, New York: Financial markets kicked off the week on a cautious note as President Donald Trump rolled out a fresh round of tariffs, targeting major Asian allies and injecting new uncertainty into global trade.

Major stock indexes declined while the dollar strengthened against major currencies on Monday as Trump announced 25 percent tariffs on goods from Japan and South Korea. The White House is expected to make further trade moves in the coming days.

Longer-dated U.S. Treasury yields edged higher.

Trump said on Monday the U.S. would impose a 25 percent tariff on imports from Japan and South Korea beginning August 1, unveiling the first two of what he described as a series of letters to trading partners detailing new levies.

U.S.-listed shares of Japanese automakers dropped sharply, with Toyota Motor down 4.1 percent and Honda Motor off by 3.8 percent.

Treasury Secretary Scott Bessent said earlier this week that the United States is expected to make several trade announcements within 48 hours. A self-imposed deadline to finalise deals looms on July 9.

"We're down (in stocks) after the long weekend, and it's somewhat of a critical week in terms of the tariffs," said Peter Cardillo, chief market economist at Spartan Capital Securities in New York. "The prospect of what may or may not happen with the trade deals... is causing investors to be somewhat cautious."

While tariffs are likely to increase prices and slow growth, market participants say uncertainty about future policies is an even greater drag, causing companies to delay key decisions.

S&P 500 companies will soon begin reporting second-quarter earnings.

Trump had previously announced in April a 10 percent base tariff on most countries and higher "reciprocal" rates of up to 50 percent, with a Wednesday deadline. He also warned levies could reach "maybe 60 percent or 70 percent" and threatened an additional 10 percent for countries aligning with the BRICS bloc—Brazil, Russia, India, and China.

On Monday, the Dow Jones Industrial Average fell 515.77 points, or 1.15 percent, to 44,314.92. The S&P 500 dropped 56.23 points, or 0.90 percent, to 6,222.20, while the Nasdaq Composite slipped 195.58 points, or 0.97 percent, to 20,404.31.

Tesla shares were down 7.4 percent after CEO Elon Musk announced the launch of his new U.S. political party, the "American Party."

MSCI's global stock index dropped 0.76 percent, while the pan-European STOXX 600 rose 0.44 percent.

The yield on benchmark U.S. 10-year notes rose to 4.391 percent, up 5.1 basis points from Thursday.

The dollar index rose 0.58 percent to 97.53, with the euro down 0.59 percent at US$1.1709. The dollar also strengthened 1.04 percent against the Japanese yen to 146.02.

Markets now await minutes from the Federal Reserve's last meeting and further clarity on interest rate cuts after stronger-than-expected June U.S. jobs data.

The Reserve Bank of Australia is expected to lower rates by a quarter point to 3.60 percent at its Tuesday meeting, marking the third rate cut in the cycle.

In commodities, U.S. crude rose 0.7 percent to $67.47 a barrel, while Brent climbed 1.33 percent to $69.21.