By Kevin Buckland and Ankur Banerjee

TOKYO (Reuters) -The dollar rallied sharply on Tuesday after U.S. President-elect Donald Trump pledged tariffs on all imports from Canada and Mexico, and additional tariffs on China.

Stocks declined, giving back some of the robust gains of the previous session, when they were buoyed by the nomination of fund manager Scott Bessent as Treasury Secretary, considered by investors as a voice for Wall Street in Washington.

Bessent's appointment had also led to a sharp fall in U.S. yields as investors scooped up Treasury bonds, sending the dollar sliding in the previous session.

"It's almost as if Trump wants to remind markets who is in control, after nominating Scott Bessent as Treasury Sec - a man markets expected to cool Trump's potency," said Matt Simpson, senior market analyst at City Index.

"With the Canadian dollar rising against the Mexican peso, markets are assuming this will hit Mexico the hardest."

The dollar jumped 1.6% to 20.6000 Mexican pesos as of 0213 GMT on Tuesday, and climbed 1% to C$1.4132.

It strengthened 0.2% to 7.2628 yuan in offshore trading, after earlier reaching the highest since late July at 7.2730 yuan.

Australia's risk-sensitive dollar - which also tends to reflect the outlook for top trading partner China - slumped 0.5% to $0.6474, after earlier dipping to $0.64335 for the first time since Aug. 5.

"It was just last month that Trump said that 'the most beautiful word in the dictionary is tariff', so there really should not have been a surprise in Trump's intention, just in the timing of the comments," said Sean Callow, a senior FX analyst at ITC Markets.

"The fall in trade-sensitive currencies makes sense, and should persist near term."

Japan's Nikkei dropped 1.2%, giving back most of Monday's gains, as investors contemplated the risks of tariffs on the nation's many heavyweight exports, particularly automakers. Toyota slid 2% and Nissan tumbled 4%.

Australia's stock benchmark eased 0.46%, a day after rising to a record high. Taiwan's share index lost 0.8%.

However, Hong Kong's Hang Seng added 0.6%, and mainland blue chips rose 0.2%, reversing earlier declines.

Trump said that on his first day in office he would impose a 25% tariff on all products from Mexico and Canada, and an additional 10% tariff on goods from China, citing concerns over illegal immigration and the trade of illicit drugs.

Trump has previously pledged to end China's most-favored-nation trading status and slap tariffs on Chinese imports in excess of 60%.