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(Bloomberg) -- Asian shares dropped with European and US equity futures as traders weighed the impact of president-elect Donald Trump’s policy agenda and the make-up of his cabinet.

The MSCI Asia Pacific Index slipped for a third day as Treasury yields rose amid concern Trump’s initiatives such as tax cuts will bolster inflation. Hong Kong shares led losses in Asia following reports the former president is poised to pick two men with track records of criticizing China for key positions in his new administration.

While the so-called Trump trade helps boost the dollar and US stocks, the impact of the former president’s policies are expected to be less positive on assets elsewhere in the world. His plan to boost tariffs is set to weigh on economies around the globe, especially countries such as China which are major exporters to the US.

“There are question marks around another round of Trump tariffs, the deficit and upward pressure on the dollar, forcing the Fed to slow the pace of easing,” said Phillip Wool, head of portfolio management at Rayliant Global Advisors. “All of those anxieties seem to be registering more significantly with investors today and weighing on Asian shares.”

Treasury 10-year yields climbed as much as three basis points to 4.34% as trading of US government securities reopened in Asia following a US holiday on Monday. The Bloomberg Dollar Spot Index gained 0.2% after rising to a one-year high on Monday. Oil dropped following its biggest decline in two weeks.

Hong Kong’s Hang Seng Index slipped as much as 3.3%. Senator Marco Rubio — who has taken an aggressive stance on China’s emergence as an economic power — is expected to be named secretary of state, Bloomberg reported. Representative Mike Waltz, who views China as a “greater threat” to the US than any other nation, is in line to be national security advisor.

“Trump’s reported appointments of well-known China hawks such as Marco Rubio and Mike Waltz are indeed weighing on the Hong Kong market’s sentiment,” said Homin Lee, senior macro strategist at Lombard Odier. “This underscores the high likelihood of Trump following through on his campaign pledge to implement punitive tariffs on China’s exports to the US.”

China’s benchmark CSI 300 Index swung to a loss after earlier drawing at least some support from a report saying the authorities are planning to cut taxes for home purchases to help revive a moribund housing market. A Bloomberg Intelligence gauge of developers’ shares climbed as much as 0.3% after the news, before falling back.