Britain, Europe, and Diefenbaker's trade diversion proposals, 1957-1958

On the eve of the Progressive Conservative election victory in 1957 there was nothing in the 'low politics' of trade and monetary relations between Canada and the United Kingdom to match the dramatic impact of the Suez Crisis on the broader relationship between the two countries. But although economic relations had not been subject to any such shock, Canada's economic links with the United Kingdom had been subject to prolonged erosion and were completely overshadowed by those between Canada and the United States. British exports to Canada, despite preferential treatment, had struggled in the postwar years. Although they had risen sharply between 1955 and 1956, they still accounted for only 8.5 percent of total Canadian imports in those years. This was approximately half the prewar share, still well below the level of the late 1940s, and dwarfed by imports from the United States, which accounted for 73 percent of the market. Britain was Canada's second most important customer, but a long way behind the United States, which had steadily grown in absolute and relative importance in the decade after the Second World War. Canadian exports to the United Kingdom constantly disappointed Ottawa, and an edge to Canadian frustration was provided by the persistence of dollar rationing and import licencing by Britain, which hampered Canadian sales. The Americans dominated inward investment.