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Tariff Structure, Trade Expansion, and Canadian Protectionism, 1870–1910

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  • Eugene Beaulieu
  • Jevan Cherniwchan

Abstract

Canada's trade policy at the end of the 19th century is commonly viewed as protectionist and extremely costly. In this paper, we employ the Anderson‐Neary Trade Restrictiveness Index to re‐examine this view. Based on product‐level customs data, we show that Canadian trade policy between 1870 and 1910 was more restrictive than previously understood, but created smaller welfare losses than previously believed. These results are primarily driven by high tariffs on inelastic, non‐competing import goods. Although Canada's tariff structure becomes more restrictive over the period, our findings indicate it was not as protectionist or as costly as once thought. Structure tarifaire, expansion du commerce et protectionnisme canadien entre 1870 et 1910. La politique commerciale canadienne à la fin du 19e siècle est habituellement considérée comme protectionniste et extrêmement coûteuse. Dans ce mémoire, on emploie l'indice de restriction du commerce de Anderson‐Neary pour réexaminer ce point de vue. A partir de données du service des douanes au niveau du produit, on montre que la politique commerciale canadienne entre 1870 et 1910 a été plus restrictive que ce qu'on avait pensé autrefois, mais qu'elle a créé des pertes de bien‐être moindres que ce qu'on avait cru antérieurement. Ces résultats sont d'abord engendrés par des droits de douanes élevés sur des biens d'importation qui ne concurrencent pas les biens domestiques et dont la demande est inélastique. Même si la structure tarifaire du Canada devient plus restrictive au cours de cette période, les résultats montrent qu'elle n'est ni aussi protectionniste ni aussi coûteuse qu'on l'a déjà pensé.

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  • Eugene Beaulieu & Jevan Cherniwchan, 2014. "Tariff Structure, Trade Expansion, and Canadian Protectionism, 1870–1910," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 47(1), pages 144-172, February.
  • Handle: RePEc:wly:canjec:v:47:y:2014:i:1:p:144-172
    DOI: 10.1111/caje.12065
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    1. Feenstra, Robert C., 1995. "Estimating the effects of trade policy," Handbook of International Economics, in: G. M. Grossman & K. Rogoff (ed.), Handbook of International Economics, edition 1, volume 3, chapter 30, pages 1553-1595, Elsevier.
    2. Douglas A. Irwin, 2010. "Trade Restrictiveness and Deadweight Losses from US Tariffs," American Economic Journal: Economic Policy, American Economic Association, vol. 2(3), pages 111-133, August.
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    4. Sibylle H. Lehmann & Kevin H. O'Rourke, 2011. "The Structure of Protection and Growth in the Late Nineteenth Century," The Review of Economics and Statistics, MIT Press, vol. 93(2), pages 606-616, May.
    5. Antoni Estevadeordal & Brian Frantz & Alan M. Taylor, 2003. "The Rise and Fall of World Trade, 1870–1939," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 118(2), pages 359-407.
    6. James E. Anderson & J. Peter Neary, 2005. "Measuring the Restrictiveness of International Trade Policy," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262012200, December.
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    Cited by:

    1. Léo CHARLES, 2017. "A new empirical test of the infant-industry argument : the case of Switzerland protectionism during the 19th century," Cahiers du GREThA (2007-2019) 2017-11, Groupe de Recherche en Economie Théorique et Appliquée (GREThA).
    2. Ian Keay, 2019. "Protection for maturing industries: Evidence from Canadian trade patterns and trade policy, 1870–1913," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 52(4), pages 1464-1496, November.
    3. Patrick Alexander & Ian Keay, 2018. "Responding to the First Era of Globalization: Canadian Trade Policy, 1870–1913," Staff Working Papers 18-42, Bank of Canada.
    4. Luke H. Grayson & Brian D. Varian, 2023. "Economic Aspects of Australian Federation: Trade Restrictiveness and Welfare Effects in the Colonies and the Commonwealth, 1901-3," CEH Discussion Papers 01, Centre for Economic History, Research School of Economics, Australian National University.
    5. Patrick Alexander & Ian Keay, 2017. "The Welfare Effects of Protection: A General Equilibrium Analysis of Canada’s National Policy," Staff Working Papers 17-18, Bank of Canada.
    6. Gillian C. Hamilton & Ian Keay & Frank D. Lewis, 2017. "Contributions to Canadian economic history: The last 30 years," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 50(5), pages 1632-1657, December.
    7. Alexander, Patrick D. & Keay, Ian, 2018. "A general equilibrium analysis of Canada’s national policy," Explorations in Economic History, Elsevier, vol. 68(C), pages 1-15.
    8. Jaworski, Taylor & Keay, Ian, 2022. "Globalization and the spread of industrialization in Canada, 1871–1891," Explorations in Economic History, Elsevier, vol. 86(C).
    9. Michael Hinton & Thomas Barbiero, 2012. "Is Protection Good or Bad for Growth? Lessons from Canada's Cotton Textile Mills," Working Papers 036, Ryerson University, Department of Economics, revised Oct 2012.
    10. Harris, Richard & Keay, Ian & Lewis, Frank, 2015. "Protecting infant industries: Canadian manufacturing and the national policy, 1870–1913," Explorations in Economic History, Elsevier, vol. 56(C), pages 15-31.

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    More about this item

    JEL classification:

    • F1 - International Economics - - Trade
    • N7 - Economic History - - Economic History: Transport, International and Domestic Trade, Energy, and Other Services

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