UK braces for policy flashpoints with Trump’s US

Sir Keir Starmer may have sent his “hearty” congratulations to Donald Trump on his victory in the US presidential election this week, but there are a number of policy areas where the UK government is poised to clash with the incoming Republican administration.

The prime minister will need to strike a balancing act: maintaining goodwill with the next White House to work together on thorny global issues, while ensuring he does not alienate domestic voters who largely take a dim view of the president-elect.

Whitehall insiders are also bracing for personality clashes, particularly with Elon Musk, who is tipped for a prominent role in Trump’s team and has revelled in using his social media platform to goad Starmer and criticise the UK.

Tariffs

Economists have warned Trump’s threat to impose 10-20 per cent tariffs on all imports into the US — and 60 per cent tariffs on Chinese goods — would hit UK trade and investment.

A sector-by-sector analysis by the Centre for Inclusive Trade Policy at Sussex University forecast Trump tariffs could cause a £22bn annual hit to UK exports, with key sectors such as fishing and petroleum facing sharp declines.

“Most UK industries . . . will face steep challenges if the US goes ahead with the proposed tariffs,” said UKTPO economist Nicolò Tamberi, though he added textiles “may see gains from trade shifts due to reduced Chinese competition in the US market”.

The National Institute of Economic and Social Research said tariffs of 10 per cent would cut forecast GDP growth by 0.8 percentage points next year, and cause a 1.4 percentage point reduction in 2026.

Ahmet Kaya, principal economist at Niesr, said higher prices would hit lower-income households hardest. “Trump’s proposed tariffs would be yet another shock to the UK economy,” he added.

The prospect has sent shockwaves through Whitehall. “This has the potential to be as problematic for us as Brexit,” said one British government figure.

Foreign and defence

Trump has pledged to “end wars”, a noble ambition that poses problems for a world currently enmeshed in multiple conflicts.

The UK’s steadfast support for Ukraine under successive Tory and Labour administrations could be severely undermined by the president-elect, who has indicated his desire for Kyiv to agree a swift deal with Moscow, triggering anxiety about the prospect of him pressing Ukraine to accept terms.

While Starmer has promised the UK will raise defence spending to 2.5 per cent of GDP — compared with 2.3 per cent currently — there are questions over whether European states could provide plug the military and financial gap if the US, which has provided a major proportion, pulls back.

Trump’s position will also have a bearing on Israel’s conflicts with Hamas in Gaza and Hizbollah in Lebanon, although it remains to be seen how much leverage he will have over Israeli Prime Minister Benjamin Netanyahu.

The UK government has increasingly stepped up pressure on Israel to ease the humanitarian crisis in the region and to show restraint towards Iran to avoid spiralling conflict in the region.

Dr Burcu Ozcelik, senior research fellow at the Rusi think-tank, said: “If the election results indicate, at least partially, American voters’ repudiation of the Democratic party’s policies in Gaza and the failure to negotiate a ceasefire deal, it is difficult to see how a Trump administration will pivot to improve the situation.”

Nato

Trump has previously expressed ambivalence about Nato. Any move by him that cast doubt on Article 5 — the principle of collective defence that lies at its heart — could force Britain and Europe to shoulder far more of the burden of securing their own region, above and beyond current planned increases.

While the prime minister would like to focus expenditure on vote-winning areas like the NHS and education, he may yet be forced to pour even more cash into Britain’s armed forces.

Strategic rivalry between the US and China is meanwhile likely to intensify under Trump, which could have consequences for London.

During his first term, Trump pressured Britain to fall into line on Beijing, such as banning technology manufactured by Chinese company Huawei from the UK’s 5G rollout.

Technology

Governments around the world are drawing up rules to govern how AI is developed and used, making the next few years key to the safe rollout of the rapidly-evolving technology.

Trump has said he plans to scrap the Biden administration’s Executive Order on AI — which was tied closely to the UK’s AI Safety Summit last year.

The move would put the US on a collision course with the UK government on regulation, one UK-based technology lobbyist warned. “To me, the downsides are quite significant” for the UK’s role in tech, they added.

Big Tech companies are likely to be emboldened by Trump to fight against European-style regulation of the industry, such as the UK’s Online Safety act and new Digital Markets Unit regulator.

Policing of online activities is an area where Musk, Trump’s top tech industry ally, has already clashed with the UK. The X owner repeatedly likened the UK to the Soviet Union for its policing of offensive speech after far-right riots spread across the country in August.

Climate

An avowed climate change sceptic, Trump promised while campaigning to increase drilling for fossil fuels in the US and vowed to repeal the Inflation Reduction Act, Joe Biden’s flagship legislation to encourage investment in clean energy.

Labour ministers are privately aghast at Trump’s approach to climate change but some believe that Europe could become a relatively more attractive place for low-carbon investment in the coming months.

The Starmer government will pitch Britain as one of the most politically stable countries in the world with a more interventionist approach to green energy than the previous Tory administration.

Trump’s victory will also overshadow the UN COP29 climate talks in petrostate Azerbaijan next week, given the president-elect’s promise to withdraw from the 2015 Paris agreement — as he did during his first term in the White House.

Starmer is attending the COP talks in Baku but other major political figures such as French President Emmanuel Macron and EU president Ursula von der Leyen had already dropped out even before the US election.