Tokyo's Nikkei index dropped Friday, extending the previous day's losses, as U.S. President Donald Trump's new trade tariffs sent Wall Street stocks tumbling.

The Nikkei 225 index was down 1.8 percent at 34,108.23 in early trade, adding to a 2.77 percent drop on Thursday. The broader Topix index fell 2.3 percent, following a 3.08 percent decline the day before.

On Thursday, Wall Street's tech-heavy Nasdaq Composite plunged 6 percent, while the S&P 500 saw its biggest one-day retreat since 2020.

In Europe, the Paris and Frankfurt stock exchanges ended the day with losses of more than 3 percent.

Oil prices dropped more than 6 percent amid concerns that an economic downturn, driven by Trump's trade policies, would reduce demand. Gold prices hit a new record high.

The U.S. dollar slumped by as much as 2.6 percent against the euro, its biggest intraday drop in a decade, and also suffered sharp losses against the yen and British pound.

On Friday, the dollar was trading at 146.33 yen in early Asian trade, slightly rebounding from 145.99 yen in New York.

"U.S. Treasury Secretary Scott Bessent has said the current figures are the upper limit, suggesting there is room for individual negotiations," Tokai Tokyo Securities said. "But with retaliatory tariffs being imposed by other countries and regions, the situation seems to be turning into a trade war," the brokerage added.