Combining the words:
"Newfie": a Canadian derogatory term indicating dimwittedness, based on the stereotype that people from Newfoundland are unintelligent.
"Donut": A proper donut requires a rear-wheel drive car, and is achieved by flooring the gas pedal with the steering wheel cranked all the way to one side, and the tires on a slippery surface.
A Newfie Donut then is a donut done in reverse, as necessitated when a car only has front-wheel drive.
His little four-banger only had front-wheel drive, so he wanted to do a Newfie donut, so he popped it in reverse and floored it.
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