Trump is back, is the UK ready for round two?

Donald Trump returned as President of the United States yesterday and immediately started implementing his agenda with a sweeping set of executive orders. These ranged from pardoning his supporters sentenced for the January 6 riots, withdrawing from the Paris Climate Agreement, and taking America out of the World Health Organisation. The impacts of these moves will be felt all around the world and the UK has spent months preparing for a second Trump presidency.

Labour’s attention shifted to Trump in May 2024 when David Lammy visited the US to speak to both the Democrat and Republican campaigns, and build relationships for the Labour administration. The next move in this charm offensive saw Keir Starmer have dinner with Trump in September. Both Starmer and Lammy will take inspiration from JD Vance, Vice President, and Marco Rubio, Secretary of State, who had previously been heavily critical of Trump and are now in his inner circle. 

Despite this work, the relationship with Trump’s team has been uneasy, at best. The government were rocked a few weeks ago by heavy criticism from Elon Musk, a close ally of Trump who will be heading up a new ‘Department of Government Efficiency’. Musk launched a tirade of tweets attacking the government over their refusal to launch a new national inquiry on the grooming gangs scandal and called for the Prime Minister to resign. Labour were also accused of “blatant foreign interference” by the Trump campaign when it emerged Labour activists had been campaigning for Kamala Harris during the presidential election campaign. 

That being said, Trump is known to have a fond view of the UK and the government will rely on this, and his infatuation with the Royal family, to smooth the relationship. Prince William met with Trump in December and the government is  said to be considering organising a second state visit for Trump, which would make him the first elected leader to have been given two state visits by the UK. 

Much of the responsibility for navigating the ‘special relationship’ will fall on the incoming Ambassador, Lord Mandelson. However, his appointment has been cast into doubt by members of Trump’s team who are said to be concerned about his links to China and reports have suggested his appointment will be rejected. Mandelson wrote an article for Fox News to quell doubts over his appointment and used the opportunity to mention his dealings with China, “The Chinese government I have observed intensively over the past 20 years is more aggressive abroad and controlling at home and… now directly challenges Western governments and our values.“

The question remains about the purpose of this relationship building and what the government will prioritise with Trump; these are likely to fall into three categories – defence, economy and climate. 

Keir Starmer’s visit to Ukraine ahead of the inauguration showed that the UK are committed to Ukraine’s security and Trump used his inauguration address to say Putin is “destroying Russia” by not making a deal to end the war. Trump will continue to pressure European countries to spend more on defence; he recently said NATO members should spend 5% of GDP on defence (the current goal is 2%). The UK has yet to commit to spending 2.5% on defence and is awaiting the outcome of the Strategic Defence Review, expected to be published in the Spring. The UK has also decided to wait for Trump’s approval to go through with the deal with Mauritius to transfer sovereignty of the Chagos Islands, which is home to an American base. 

While Trump believes that tariffs is “the most beautiful word in the dictionary”, this is in stark contrast to Keir Starmer’s view. When interviewed by the Financial Times, the Prime Minister said, “tariffs aren’t in anybody’s interests, our ambition is to have a deal of some sorts with the US, a trade deal.” The UK hope to avoid the worst of the possible tariffs, which would put a huge dent in Rachel Reeves’ ambitions for growth, and there will be significant relief that Trump decided against implementing day one tariffs. This was reflected in the markets as sterling enjoyed its biggest one-day gain against the dollar in more than a year, rising by as much as 1.1% to $1.23. 

Finally, the UK will be most worried about Trump’s climate rhetoric and his commitment to "drill, baby, drill". Sadiq Khan has already taken the opportunity to express his disappointment with this move and said it paves the way for London to “lead the way” in tackling climate change. The UK will no doubt look to reassure sustainable investors that their commitment to the climate remains and will not be taken off course by the Trump-inspired backlash in America. 

Starmer is determined to rebuild the UK’s international alliances and has invested a lot of time travelling the world in the early period of his premiership. The coming months will show if this approach has been a success as he pursues an ambitious balancing act of resetting the UK’s relationship with the EU, building a closer relationship with China, and keeping Trump on side.