and investment. at the end of the day, the protectionist country would produce more goods in sectors protected by higher trade barriers but also fewer goods for export. the expectation that higher trade barriers would save jobs ignores these critical second - round effects. moreover, the story may not end there. what happens if another country that now faces higher trade barriers responds by raising its own barriers? that would push production even further out of high - value - added exports that are now deterred by the higher foreign trade barriers and into those exports that face lower trade barriers, or into the goods protected by the higher domestic trade barriers. raising trade barriers would risk setting off a trade war, which could damage economic growth prospects around the world. measures that raise trade barriers typically would protect lower - wage, import - competing jobs, but would also weigh on the prospects for jobs in the more efficient export sector, which tend to be higher - paying. the outcome would be countries producing more where they have a competitive disadvantage, and less where they have a competitive advantage — the exact opposite of what we should be aiming for. for example, in the united states, one of our largest manufacturing exports is aerospace parts ( which requires skilled labor ) and one of our largest imports is apparel ( which requires less skilled labor ). these second - round effects would also likely hurt productivity growth. scarce resources would be used less efficiently and trade protection would likely lessen the level of competitive pressure that helps drive innovation. moreover, lower productivity growth would likely lead to a slower improvement in a nation ’ s living standards over time. 7 better approaches to deal with globalization rather than protectionism, a better policy would be to help domestic workers and companies compete more effectively, rather than compete less. we need additional mechanisms that allow us to more fully capture the benefits from liberalized trade and to more proactively mitigate its costs. ideally, policy should also better address job losses and income inequality from automation and other technological advances. how we respond should depend on regional and industry circumstances. these include the nature of trade impacts, the skill sets and location of the workers that have been affected, and the amount of resources that can be mobilized to facilitate adjustment. increasing specialization brings real economic benefits, but can also leave workers more exposed to shifts in demand for their services, potentially on short notice. these issues are not going away, especially as emerging market economies take on a larger role in the global economy and automation continues apace. if we are to maintain a

than the present network of national systems was designed to support. technological advances provide us with a new set of tools to make what may seem optimal from a systemic perspective more practical. we will continue to work closely with the private sector in designing effective ways to deal with the full range of new challenges from increased financial integration and increased concentration, greater complexity, and new threats to operational security and continuity. and we will work hard, as we have in the past, to try to find the right balance between the broad objectives of stability and security and the efficiency of the system.