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In this paper we investigate the relationship between tariff liberalization and inequality. We examine this issue in a two-sector open economy model with heterogeneous agents. There are imports of consumption and capital goods that are subject to different tariff rates. With the aid of numerical simulations, we find that the effects of consumption tariffs on activity and inequality differ to the ones generated by investment tariffs. A reduction on consumption tariffs leads to a mild increase in output, a negligible reduction in wealth inequality and a rapid increase in income inequality. Meanwhile, a reduction on investment tariffs leads to a significant increase in output, an important reduction in wealth inequality and a short-run reduction in income inequality while an increase of it in the long run. If the objective is to reduce tariffs with minimal impact on income inequality, then removing the tariff on investment quickly, and the consumption tariff more gradually will achieve such a goal
