National Policy

The National Policy was a Canadian economic program introduced by John A. Macdonald's Conservative Party in 1876 and put into action in 1879. It called for high tariffs on imported manufactured items to protect the manufacturing industry. Macdonald campaigned on the policy in the 1878 election, and defeated the Liberal Party, which supported free trade. it lasted from 1879 until sometime in early 1950s.

The term National Policy originally referred to a proposed raise in tariffs by the Macdonald-led Conservatives ("Tories") during the 1878 election campaign. Over time the term became associated with the entire Tory platform for developing the economy, especially increased immigration to Western Canada, and the development of the Canadian Pacific Railway's transcontinental line.

Macdonald hoped that by creating a strong manufacturing base in Canada, the nation would become more secure and less reliant on the United States. He was also closely linked to the Montreal and Toronto business interests that would benefit from such a policy, and they played an important role in keeping the Tories in office until 1896.

Despite a brief experiment with free trade in the Canadian–American Reciprocity Treaty before Confederation, the Americans were intent on pursuing a strongly protectionist policy, with tariffs higher than Canada imposed under the National Policy.

With such high American tariffs, Canadian firms could not compete in the United States, but American firms could enter Canada. Canadian producers were particularly hurt by US producers dumping surplus goods in Canada, so as not to lower prices in the United States. Tariffs were put on goods coming into Canada. These tariffs would make American goods more expensive.

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