Trade fears, which had eased slightly in recent sessions, were in focus after White House chief economic advisor Gary Cohn resigned from the Trump administration on Tuesday.
While Cohn's departure date has not been announced, the development came after Trump's announcement last week that tariffs of 25 percent and 10 percent would be implemented on steel and aluminum imports, respectively. Cohn, a free trade advocate, had been against the tariffs.
The dollar slid against the safe-haven yen on the news, fetching 105.54 at 2:40 p.m. HK/SIN, after falling as low as 105.43 earlier and compared to the 106.1 handle seen at the end of the New York session.
Against the Swiss franc, which is also seen as a safe haven currency, the greenback declined to trade at $0.9365, compared to levels around the $0.94 handle seen in the last session. The dollar index, which tracks the U.S. currency against a basket of six rivals, slipped around 0.2 percent to 89.425.
The SPDR S&P 500 ETF Trust also fell 1.5 percent while U.S. stock index futures traded lower. Dow Jones industrial average futures were down 419 points during Asia afternoon trade.
Following Trump's threat that European Union car taxes could be taxed after the bloc said it would not sit idly by U.S. tariffs, one expert cautioned that tensions could continue to simmer.
"It won't end there. It is not hard to characterize current market behavior as complacent," wrote ING Chief Economist Robert Carnell in a note.
In corporate news, Japan's Kobe Steel on Tuesday said CEO Hiroya Kawasaki would resign on April 1 following a data falsification scandal. Shares of Kobe Steel were down 7.39 percent, under-performing the broader index.
Despite the broader declines seen in greater China markets, banking stocks listed on the mainland got a boost after Reuters reported on Tuesday that regulators intended to cut the proportion of funds required to cover bad debt. China Construction Bank finished the day up 1.85 percent and Industrial and Commercial Bank of China advanced 1.37 percent.
On the commodities front, oil prices moved in the same direction as stocks. U.S. crude futures lost 0.86 percent to trade at $62.06 per barrel and Brent crude futures were down 0.85 percent at $65.23.