The benchmark Nikkei 225 index was down 0.24 percent or 52.58 points at 21,482.67 in early trade, while the broader Topix index was down 0.27 percent or 4.17 points at 1,564.57.

"Trade rhetoric remains on the strong side with no signs that tensions will abate anytime soon," Tapas Strickland, senior analyst at National Australia Bank, said in a commentary.

Senior market analyst Toshiyuki Kanayama of Monex agreed.

"The Japanese market is seen starting with sell-orders dominating trade following falls on the US market" after US President Donald Trump suggested he could impose new tariffs on Chinese goods.

China on Tuesday rejected claims by Trump that it is being forced to make a trade deal because of its slowing economy, as the two sides prepare for more talks.

Beijing and Washington have been locked in a stormy trade war that has seen them hit each other with tariffs covering more than $360 billion in two-way trade.

"It's completely misleading to say, as the US side does, that because of its economic slowdown, China is eager to reach an agreement," said foreign ministry spokesman Geng Shuang.

Later Tuesday, Trump reiterated that he could impose additional tariffs on Chinese imports if he wants, after promising to hold off on more duties in a trade-war truce he reached with China's Xi Jinping last month on the sidelines of the G20 summit.

The dollar fetched 108.29 yen in early Asian trade, against 108.33 yen in New York.

In Tokyo, chip-related shares were among losers, with chip-testing equipment maker Advantest trading down 1.47 percent at 3,010 yen and chip-making equipment manufacturer Tokyo Electron down 1.17 percent at 16,420 yen.

The market heavyweight Fast Retailing, Uniqlo casual wear operator, was down 0.61 percent at 69,040 yen.

On Wall Street, the Dow ended down 0.1 percent at 27,335.63.