After Confederation in 1867, Canada’s national economic policy and the Industrial Revolution resulted in manufacturing becoming Ontario’s most important industry. A group of businessmen formed the Canadian Manufacturers’ Association in 1871 in an attempt “to promote Canadian industries and to further the interests of Canadian manufacturers and exporters.” This association still operates today as Canadian Manufacturers & Exporters.
Early protectionist policies also helped the growth of industry in the new nation. In particular, Sir John A. Macdonald’s 1878 National Policy placed high tariffs (up to 35 per cent) on imports—especially those from the United States—to make Canadian products relatively cheaper and more appealing for domestic consumers. Today, most economists agree that tariffs are detrimental to developed countries; however, such protection can benefit developing countries, especially when there is an already-developed nation nearby, as was the case with Canada and its neighbour, the United States.
Despite Canada’s protectionist measures, American manufacturers continued to offer stiff competition to Ontario firms, resulting in innovative technologies, such as the automobile. While Canada’s first “horseless carriage” was manufactured in Quebec in 1867, it was not until the early 1900s that the more modern, practical, and mass-produced versions of the vehicle made their way into Canada.
American innovators such as Ransom E. Olds and Henry Ford revolutionized both the automobile and the manufacturing assembly process by implementing assembly lines to allow for mass production at relatively inexpensive costs. Yet mass production could only take companies so far. American manufacturers were extremely limited in their choice of markets, as high tariffs and trade restrictions around the world thwarted their efforts to expand outside of the United States; fortunately, Canada was able to provide a solution to this issue. Because of the country’s Commonwealth status within the British Empire, Canada had trade preference with many other nations within the Empire. Accordingly, by establishing companies in Canada, U.S. automakers could sell to India, Australia, South Africa, New Zealand, and Canada itself, along with other, smaller nations in the British Empire.
Read part 6 of The History Of Ontario’s Manufacturing Industry here.