As U.S. gets tough with China, Wall Street gets weak-kneed

NEW YORK — The prospect of a fullblown trade war between the world's two biggest economies rattled investors Thursday, sending stocks to their biggest loss in six weeks.

The Dow Jones industrial average plunged more than 700 points, as President Donald Trump announced plans to slap tariffs on Chinese imports. The Chinese government vowed to defend itself.

Investors worried that if the dispute escalated, China will counterpunch with restrictions of its own, hurting American exports of airplanes, construction equipment and other goods.

Many big U.S. companies have built complicated supply chains that stretch across the Pacific Ocean. A trade war could disrupt the back-and-forth flow of parts, forcing factories to slow or halt production.

U.S. companies with substantial sales to China were clobbered in the crossfire Thursday. Construction equipment maker Caterpillar lost 5.7 percent of its value — its worst loss since mid-2016. Aerospace company Boeing slid 5.2 percent. Chipmaker Micron Technology fell 3.5 percent.

Caterpillar gets about 5 percent of its revenue from China, Boeing 12 percent and Micron nearly 50 percent, according to the research firm Factset.

The broader S&P 500 index lost 2.5 percent and is now down slightly for the year.