Basically the stereotypical shape of a Northern European's head was thought to be square- so it was (and is) an insult to call someone with that ethnic makeup squarehead.
Mother: "Yes dear, the fucking Squareheads do have unusually shaped skulls. The Swedish have even more box-like heads... don't even get me started on the Danes or Germans..."
Most English-Canadians are unaware of it's usage.
The term Square Head refers to the way farm land was divided among the citizenry. The English had square farms whereas the French had rectangular strip farms stemming from a river. If you google map over Quebec and Manitoba you will clearly see the difference in farm shapes.
French Canadians used strip rectangular farms connected to a river so that more farmers can have access to water (more fair and productive). They find the square shape "stupid".
This is why it is an insult to call an English Canadian a square head...
French Canadian: "Ta gueule estie d'tete Caree" (shut-up square head).
Square Heads are puck hogs...
2. A late 19th century ethnic slur directed at German and Scandinavian immigrants to North America.