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In: Economics

What were the consequences of the National Policy Tariffs of 1979 for the Canadian economy and...

What were the consequences of the National Policy Tariffs of 1979 for the Canadian economy and do you think they help us understand the nature of our economic challenges today?

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Expert Solution

The National Policy was the Conservative Party's core economic and political policy under Prime Minister John A. Macdonald, and many of its high-ranking predecessors. This meant that Canada imposed high tariffs on foreign imported goods from 1878 to the Second World War in order to protect Canadian farmers from American competition.
The National Policy was the Conservative Party's core economic and political policy under Prime Minister John A. Macdonald, and many of its high-ranking predecessors. This meant that Canada imposed high tariffs on foreign imported goods from 1878 to the Second World War in order to protect Canadian farmers from American competition.

Producers ' tariff defense was Macdonald's Liberal-Conservative coalition's rallying cry in its successful general election campaign of 1878. The Liberals of Prime Minister Alexander Mackenzie, in government from 1873-78, had previously pursued a tariff policy solely for tax purposes around 20% of customs duties on manufactured goods. Despite the economic crisis of the 1870s and the failure of the 1874-75 effort by the Liberals to reach a reciprocity or free trade agreement with the United States, they would have remained faithful to this non-protectionist policy.

High tariffs are intended to broaden the Canadian economy's base and restore Canadians ' trust in their country's development. Macdonald recognized that his National Policy would also assist a group of wealthy businessmen, including several in Montreal, who might in turn be expected to generously donate to the Conservative Party. The tariff on most imported manufactured goods has been raised, giving Canadian producers significant coverage. The reduced customs duties on imported raw materials and semi-processed goods, which reduced their production costs, were equally important for manufacturers. Campaigning on the premise that a modern market had grown under the National Policy, that reciprocity threatened the Canadian economy, and that the question before the electorate was "whether the spirit of Canadianism or Continentalism prevails in the northern half of this continent," Robert Borden's Conservatives swept to victory, taking the National Policy to a continuation.

Protects the Canadian industry for kids. Protects Canada's jobs. Helps to create new business. Technology transfer to Canada. Increases government revenues. Canadians will need to devise creative approaches that would take into account all the factors involved: Canada will take greater account of regional inequalities, promote growth as desired by each region while preserving its local autonomy and climate. Even people who are independent and self-reliant will happily accept working and living in harmony with others.


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