Hong Kong's Hang Seng was down in overnight trading on Tuesday after the US imposed a 10% tariff on around $200bn worth of Chinese imports, starting next week.
US President Donald Trump threatened to increase this rate to 25% by the start of next year if the two countries failed to agree a deal.
This marks the biggest set of tariffs imposed on China so far with around 6,000 items including handbags, rice and textiles being targeted.
China has vowed to retaliate with its own set of tariffs marking a dramatic increase in the tensions between the two nations.
Trump said in a statement: "I urge China's leaders to take swift action to end their country's unfair trade practices. Hopefully, this trade situation will be resolved, in the end, by myself and President Xi [Jinping] of China.
"We have been very clear about the type of changes that need to be made, and we have given China every opportunity to treat us more fairly."
On the news, the Hang Seng was down 0.3% to 26,846 points, while the rest of Asian stocks appeared to brush off the uncertainty with the CSI 300 of Shanghai and Shenzhen jumping 1% to 3,235 points.
Meanwhile, in Japan, the Nikkei 225 and the Topix were both up in overnight trading 1.5% and 1.9%, respectively.
In the currency markets, the US dollar fell sharply against the euro after Trump's announcement and is now 0.07% down while against the safe haven yen it is up 0.14%.
The US has already slapped tariffs on $50bn of Chinese goods so far this year with the latest move coming after months of talks between US and Chinese officials produced little progress, according to the Financial Times.
A number of bodies have already issued stark warnings about the threat of an escalating trade war with the International Monetary Fund (IMF) claiming the world economy could be "torn apart" in April.
Hussein Sayed, chief market strategist at FXTM, commented: "There is no doubt that China's economy will begin feeling the pain given that the US duties now cover almost half of its imports.
"So, expect to start seeing more aggressive monetary and fiscal actions to reduce the ongoing impact of the trade war.
"However, it remains unclear to what extent the US economy will be hurt with these tariffs, but definitely corporate and consumer bills will be on the rise in the coming months.
"Chinese officials have also threatened to walk away from the negotiating table, as they seem to be betting on Republicans losing the midterm elections in November.
"Investors should be prepared for more short-term downside risks across equity markets given all these uncertainties."
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