The Nikkei average share price index ended down 0.49% at 21,778.61.
A survey from the U.S. Institute for Supply Management (ISM) on Tuesday showed manufacturing activity in the United States tumbled to a more than 10-year low in September as the trade war weighed on exports. [nL2N26L0OS]
"The ISM figures were surprisingly low, and this is having a direct impact on Japan's industrial shares," said Kiyoshi Ishigane, chief fund manager at Mitsubishi UFJ Kokusai Asset Management Co.
"Exports don't make up such a large share of the U.S. economy, but there are still concerns about global trade," he said.
There were 150 decliners on the Nikkei index against 69 advancers on Wednesday.
Heavy equipment makers and exporters led declines as any weakness in the United States - a major market for Japanese capital goods - and a slightly stronger yen could impact corporate profits.
The largest losers in the index by percentage were Nissan Chemical Corp down 5.43%, followed by Rakuten Inc losing 4.76% and Yaskawa Electric Corp down by 4.22%.
The largest gainers were Kansai Electric Power Co Inc up 3.22%, followed by KDDI Corp gaining 2.99 %, and Casio Computer Co Ltd up by 2.69%.
The broader Topix index fell 0.42% to 1,596.29.
The volume of shares traded on the Tokyo Stock Exchange's main board was 1.01 billion, compared to the average of 1.18 billion yen in the past 30 days.
($1 = 107.8300 yen)
(Reporting by Stanley White; Editing by Richard Borsuk)
By Stanley White