Do tariffs work? | IFS Zooms In

24th January 2025

This week, President Trump was inaugurated for his second term and announced plans to impose significant tariffs on imports. But what exactly are tariffs, and how do they work?

In this episode, we dive into the economic consequences of tariffs, why governments use them, and whether they actually achieve their intended goals.

Joining Paul to unpack these questions is Peter Levell, Deputy Research Director at the Institute for Fiscal Studies (IFS) and an expert on trade economics.

In this episode, we explore:

What tariffs are and why governments impose them
The current state of UK tariffs and the revenue they generate
The economic consequences of tariffs and whether there are any justifications for them
The potential impacts of Trump's new tariff policies on global trade, including the UK


00:00 - Introduction
1:30 - What are tariffs?
2:00 - Does the UK have any tariffs?
3:30 - Trade with the European Union
5:10 - What do economists think of tariffs?
11:00 - Why do economists think trade is good?
14:40 - Using tariffs to protect domestic industry
23:00 - Who pays for tariffs?
25:30 - Impact of Trump's tariffs globally
29:25 - The role of the World Trade Organisation
32:30 - Which countries are most exposed?
36:00 - Conclusion