For Aristotle, who defined tragedy, tragedy is always a tragedy of actions. For him, plot (i.e., action) was always the paramount point in tragedy. The character of the characters came second. "Character," of course, is the agent of action in a drama. Yet "character" also denotes inner qualities of the individual agents of action. As a result of this dual meaning, when you ask "tragedy of character?" you are asking if the tragedy grew from the inner qualities of the agent of action. However, when you ask "tragedy of characters (plural)?" you are asking if there were not many agents of action who suffered tragic ends.
For Tragedy is an imitation, not of men, but of an action and of life, and life consists in action, and its end is a mode of action, not a quality. Now character determines men's qualities, but it is by their actions that they are happy or the reverse.(Aristotle, Poetics)
For Aristotle, only the central character was the focal point of tragedy through hamartia. The meaning of this term is poorly understood; some scholars interpret it as "mistake" rather than "flaw." Aristotle defines tragedy as stemming from (1) the mistake(s) an agent of action makes through lack of understanding, not through evil intent, or from (2) the errors an agent makes through the weaknesses in inner qualities. Number (2) is usually emphasized and referred to as the "tragic flaw," though tragic irony derives from mistakes made from lack of knowledge leading to actions having results in the reverse of what was intended and expected.
Michael Henchard begins his descent into tragedy with his action of selling Susan, with Elizabeth-Jane, to Newson. This action, though, derived from the great weakness in his inner qualities. So, while in Aristotelian terms, The Mayor of Casterbridge is a tragedy of action, in more sophisticated contemporary analysis of the fine points of tragedy, you may say that it is a tragedy of character, Henchard's inner character of weak qualities.
In other words, the mistake Henchard makes derives from the weakness(es) of his inner quality--his inner character. In addition, Henchard's catastrophe is precipitated by Aristotles' requirements of peripeteia and anagnorisis in which intended effects turn out to be reversed and realization produces an unfavorable change in relationship between the one favored (Farfrae) and the one doomed (Henchard).
The Mayor of Casterbridge can be justified as a tragedy of characters since the very rise of all characters ecome the reason for their demise. Fate plays an important rolethroughout the novel as it does in all of Hardy's works, and it is this fate which causes tragedy to all the characters. Henchard, Elizabeth-Jane, Susan, Lucetta, Newson and other minor characters, all add to each other's tragedy.