John A. Macdonald, previously the inaugural Prime Minister of Canada from 1867 until he resigned in 1873, returned to power in 1878 after his electoral victory that year, which enabled him to implement the National Policy.
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.
[4] The Liberals, under Laurier, found imperial preference a convenient vehicle for reducing tariffs, as it appealed to the Empire-mindedness of Conservatives.
John A. Macdonald's national policy became a huge public issue once the Liberal government led by Alexander Mackenzie failed to raise the budget on tariffs in 1876.
The purpose of high tariffs were solemnly for the expansion of the base of Canadian economy and to project a more confident country for development in Canada.
The National Policy was slowly dismantled under the many years of Liberal rule under William Lyon Mackenzie King and Louis St. Laurent.
In general, economists argue that it increased prices and lowered Canada's efficiency and ability to compete in the world.
By not becoming merged into the larger, more efficient American economy, Canada built too many monopolistic firms and too many small inefficient factories with high prices for consumers.
Historians tend to see the policy in a more positive light by viewing it as a necessary expense to create a unified nation independent of the United States.
There was, however, a boon to the citizens as there was no income tax, making the slightly higher price of manufactured goods easier to bear.
It was only under the Liberal governments of William Lyon Mackenzie King and Louis St. Laurent beginning in the 1920s that protectionist tariffs rates began to be cut.
The defensive expansion phase relied on the tariff, railway construction, and land settlement to build the country.