The year was 1948, and Newfoundland was in the midst of a crisis of cost of living. Despite government prices controls, the average expenses of an family that lives in St. John’s had almost doubled in just 10 years.
Several factors, including the cost of shipping and distribution to the widely dispersed rural communities, helped increase prices. But the defenders of the Union with Canada blamed a particular cause: tariffs.
Before Newfoundland joined the Confederation on March 31, 1949, the small country charged the import tariffs of Canadian goods.
While some priority articles such as fresh fruit were tax free, most were subject to an average rate of 25 percent, and some were evaluated even higher rates: 30 percent in cattle, 35 percent in birds of Corral, 40 percent in shoes and clothing, 55 percent in most vegetables and 60 percent in cookies and bread.
So, as now, Newfoundland depended largely on foreign products to meet the needs of their residents, and more than half of all imports came from Canada. Even so, although Terranova charged lower tariffs to the products made in the United Kingdom and Jamaica, there were no discounts for its closest neighbor.
Tariffs, of course, are not paid by the exporting country. They are absorbed by consumers in the importing country and, as a result, prices in the essential elements were much higher for the new lands that were for Canadians.
In August 1948, the Canadians only paid, on average, 9 cents for a bread bar, 17 cents for a quarter of milk and 66 cents for a pound of beef, while the new and the tender ones were disburseing 18 cents For bread, 29 cents for milk and 90 cents for beef.
The father of the Terranova Confederation, Joey Smallwood, is famous for the “baby bonus” campaign that persuaded thousands of rural New York lands to vote in favor of the union with Canada, so that they could receive the monthly payments that The Canadian government made parents.
But Smallwood also exalted a second benefit of the Confederation. It would dismantle the Newfoundland tariff wall and reduce the price of many goods.
According to historian Raymond B. Blake, “Smallwood had been a free trade defender since the 1920s, arguing that reducing tariff barriers would significantly reduce the cost of living of working people and production costs in fishery.”
The Confederation with Canada was not strictly necessary to end tariffs. Terranova could have repealed them at any time for the benefit of their citizens, but there was a strong internal incentive to maintain them.
We could survive but never prosper in isolation.– Joey Smallwood, in 1948
Countries have different motivations to raise import tariffs. The president of the United States, Donald Trump, has cited protectionism (the desire to protect national companies from foreign competition) and diplomatic leverage (the use of tariffs to pressure foreign nations in policy changes) as factors Key in its recent impulse to impose tariffs on Canada, Mexico and Porcelain.
For Newfoundland of the early twentieth century, on the other hand, tariffs were mainly a source of income. In the years before the Confederation, Terranova obtained more than half of its tariff revenues, and that figure had shot up to 82 percent during the great depression.
In a country where many residents had low or seasonal income, the government considered tariffs as a more effective means to generate income than income tax or property tax.
When Newfoundland finally entered the Confederation and the tariff wall fell, there was a marked change in the local economy.
Within the first year, the cost of living had decreased by eight percent. Retail prices in some imported assets decreased by a third or more and, although the Newfoundland now had to pay the Canadian sales tax, the -free tax prices that represent the difference.
The cost of some merchandise made locally also submerged to coincide with its Canadian competition. However, not all Newfoundland manufacturers could survive in the new market, and some companies folded, dismissing their employees.
Even so, Smallwood and his Confederations colleagues believed that people and Economy of Newfoundland would benefit in the long term of the market competition and the new export opportunities for terranova products such as fish, paper and minerals.
It is impossible to make a direct comparison between the Terranova tariff policies in 1948 and the proposed tariff policies of the United States today, but there are still some lessons to learn.
Newfoundland in the mid -twentieth century depended much more on Canadian imports due to its small size and limited internal production capacity, but the United States depends on Canadian goods in some critical sectors.
Canada is the main foreign source of energy, forestry and wood products from the US, metals and minerals, and US manufacturing is more intertwined than ever. Some products cross and cross the border again, which would require the payment of multiple tariffs, before reaching the store shelves.
Like the cost of living was higher for terranova tenderness behind the tariff wall, the cost of living will increase for Americans if the United States proceeds with their proposed tariffs on Canadian, Mexican and Chinese products. The non -partisan Fiscal Foundation estimates that the US Average Household. Uu would pay $ 800 more in the registry only in 2025.
Joey Smallwood opposed tariffs because he believed that the freest trade benefited both parties by rationalizing production, opening new markets and creating opportunities for cooperation.
In the National Convention of Liberal Leadership in 1948, recent .
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