With the old debate on protectionism versus free trade being resurfaced as a result of new barriers imposed on imports of large economies, Britain’s
nineteenth century trade liberalization is often used as an analogy to describe and explain the economic consequences of trade policy. Despite the symbolic significance of this period in history for the arguments on free trade, previous literature disagrees on the welfare implications of Britain’s shift in policy. In this paper, we use a general equilibrium model and detailed international trade and tariff data to examine the effect of the reduction in Britain’s import tariffs in the mid-nineteenth century on its welfare. Also using data on Britain’s main trade partners, France and the United States, we show the impact changes in foreign import tariffs had on Britain’s welfare during the same period. We find that the effect of trade liberalization on welfare was positive but small. Britain’s welfare increased by 0.80 percent as a result. The average bilateral tariffs imposed by France and the United States on Britain’s imports increased during the same period. The results show that Britain’s overall welfare benefited from the increase in volume of trade even when the increase in foreign import tariffs are accounted for.