By Niket Nishant

June 3 (Reuters) - Latin American assets fell on Wednesday as fears of an escalation in the Iran war kept risk appetite in check, while worries about higher U.S. tariffs weighed on sentiment.

The MSCI index of Latin American stocks .MILA00000PUS fell 1.6%, while the corresponding currencies gauge dropped 0.4%.

Brazilian equities .BVSP fell 1.8% and were among the biggest decliners in the region, following a U.S. proposal for a new punitive tariff of 25% on many imports from Brazil.

Top U.S. trade official Jamieson Greer said the tariff was in response to what he alleged were unfair trade practices over issues ranging from digital trade to illegal deforestation.

Brazilian President Luiz Inacio Lula da Silva expressed surprise at the measure, and said the country could "not accept the treatment" the U.S. had meted out.

The Trump administration also proposed ​new tariffs of up to 12.5% on imports from 60 economies, arguing that they had failed to curb trade in goods made with forced labor.

Under the proposal, imports from major Latin American economies such as Argentina and Mexico would be hit with 10% additional duties.

Mexican stocks dipped 0.1% and the peso MXN= slipped 0.2% against a stronger U.S. dollar. Argentina's Merval .MERV stock index also fell 1%, while the peso ARS=RASL dropped 0.3%.

"Trump tariffs are coming back, but by a different name. The pretexts hardly matter; higher tariffs are on the way," said Hasnain Malik, head of geopolitical risk and EM equity strategy research at Tellimer.

In February, the U.S. Supreme Court struck down President Donald Trump's sweeping tariffs he had imposed last year under a law meant for use in national emergencies.

RENEWED MIDDLE EAST WORRIES WEIGH

Hostilities in the Gulf flared again on Wednesday as Iranian attacks ​on Kuwait damaged its airport and injured dozens, while the U.S. military carried out strikes near the Strait of Hormuz, with diplomacy to halt the war showing little sign of ‌progress.

The latest round of strikes prompted investors to question a central assumption they had been working from - that the war would be settled through negotiations rather than renewed fighting.

"The situation has deteriorated significantly, although both sides have held off from declaring an end to the ceasefire," said David Morrison, senior market analyst at Trade Nation.

In Colombia, equities .COLCAP dipped 1.2%, declining for the first time this week. Right-wing candidate ​Abelardo de la Espriella's strong showing in the first round of the country's presidential election has helped boost risk appetite.

Peruvian equities .MXNUAMPESCPGPE also fell 2%, leading regional declines as prices of copper and gold, its top exports, fell.

Key Latin American stock indexes and currencies:

Equities	Latest	Daily % change
MSCI Emerging Markets .MSCIEF	1785.2	-0.22
MSCI LatAm .MILA00000PUS	2982.14	-1.62
Brazil Bovespa .BVSP	170997.16	-1.84
Mexico IPC .MXX	68798.64	-0.13
Chile IPSA .SPIPSA	10340.78	-1.23
Argentina Merval .MERV	3192110.69	-0.997
Colombia COLCAP .COLCAP	2238.41	-1.16
Currencies	Latest	Daily % change
Brazil real BRL=	5.0388	-0.67
Mexico peso MXN=	17.318	-0.21
Chile peso CLP=	893.05	-0.67
Colombia peso COP=	3562.69	0.13
Peru sol PEN=	3.4071	-0.14
Argentina peso (interbank) ARS=RASL	1431	-0.28
Argentina peso (parallel) ARSB=	1415	1.41