Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/339388 
Year of Publication: 
2026
Series/Report no.: 
CITP Working Paper No. 032
Publisher: 
Centre for Inclusive Trade Policy (CITP), University of Sussex Business School, Brighton
Abstract: 
When the UK left the EU, it introduced a new import tariff schedule, one of the largest MFN tariff reforms in decades of a developed economy. This paper exploits this policy change to estimate the elasticity of imports to MFN tariffs, addressing the endogeneity of trade policy through two strategies: a country-based approach using trade agreement partners whose MFN exposure is plausibly exogenous, and a product-based approach leveraging mechanical tariff changes from schedule simplification. Using a difference-indifferences design with EU imports as a control group, I find that ignoring endogeneity yields an elasticity of 2.5, while IV estimates range from 4.5 to 8.7. Dynamic responses are even larger: three years after the reform, elasticities reach 10-12. These results suggest that widely used tariff-based elasticities are substantially underestimated, with implications for quantitative trade models and welfare analysis.
Document Type: 
Working Paper

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