The biggest moment in British politics this week was more than two months in the making and took place 3,665 miles away from the Palace of Westminster. And the second inauguration of Donald Trump as US President may yet turn out to be the most consequential event of Sir Keir Starmer’s time as Prime Minister.
Trump began his comeback with a bang – issuing dozens of executive orders intended to reshape the American administrative state. But Westminster breathed a sigh of relief when he held off from launching a full-blown tariff war which would inevitably hit the UK economy.
For Starmer, the priority is not getting sucked into Washington psychodrama. “Just as we wouldn’t with other countries, we are not going to comment on everything he does every single day,” one Government source said of Trump.
The Prime Minister is hoping to visit the President in the White House in the coming weeks, although no date has been set for the trip. But in the meantime Starmer will be unable to ignore the DC circus, given the massive impact that decisions taken by Trump will have on Britain.
On Thursday, a spokesman for the Prime Minister found himself trying not to criticise the US for leaving the World Health Organisation, whilst still making the UK’s support for it clear – saying: “One of the benefits of the relationship between our two countries, is that we are able to disagree, and if we have areas on which we disagree, we will raise these privately and constructively.”
In a briefing the day before, another spokesman battled to avoid hitting out at Trump’s close ally Elon Musk following claims he had delivered a fascist salute at a post-inauguration rally. The spinner would say only that “it’s for the individual to defend his own actions”, – but was then forced to clarify: “The Prime Minister would not be happy with a member of his Government doing a Nazi salute.”
Most Westminster insiders believe the knock-on effects of Trump 2.0 on the British Government fall primarily into three baskets: defence, the economy and climate change.
The President has threatened to pull out of Nato, ending the decades-long security guarantee provided by the US to Europe, if other member states do not increase their defence spending to 5 per cent of GDP – a huge increase from the current target of 2 per cent, which many countries still do not meet.
Trump signed a slew of executive orders on his return to the White House Photographer: Ben Curtis Provider: APOne former Cabinet minister warned that European leaders who believe a level of 2.5 per cent could be a “compromise” that will satisfy Trump are deluded, concluding: “I think the compromise could end up being 3 per cent.” That would cost the Exchequer more than £10bn extra a year, at a time when Rachel Reeves has little money to spare.
There are opportunities for the UK Government from the return of Trump. Talks on a free-trade deal were put in to the deep freeze when Joe Biden took power, but Whitehall officials are preparing to dust off the negotiating playbook for a possible restart.
Fresh talks will not begin immediately, as Labour ministers need to decide how far they want to replicate the approach of their Conservative predecessors and where they will diverge – and insiders emphasise they are not putting all their eggs in the US basket, talking of a “twin-track approach” which sees the EU reset take place alongside trade negotiations with India and the Gulf states, as well as with America.
Full access to the NHS
But experts have warned that the US will demand full access to the NHS on areas such as drug pricing and patents if the UK wants to secure a “full fat” deal.
Allie Renison, a former trade policy official who works for SEC Newgate, said the issues were likely to be brought up in any discussions over a free-trade aggrement. “That’s something that you’ll see that the pharmaceutical industry in the US has constantly talked about when negotiating objectives and mandates have been in play,” Renison said.
Her comments were echoed by Liam Byrne, Labour chair of the Commons business and trade committee, who said that while it was unclear what shape the trade talks would take, the NHS is something US pharmaceuticals will demand to be on the table.
“That is certainly what Big Pharma will ask Trump to champion,” Byrne said. “American drug firms want a looser regime from Nice [the National Institute for Health and Care Excellence] when it comes to drug pricing. They will argue that Nice needs to focus more on value than price.
“But the bottom line to that is they’re seeking freedom to sell more US medicine at higher prices to the NHS. And the NHS is obviously a monopoly buyer, so has real power to drive prices down. I’m sure Big Pharma will make that case to Trump. Whether he would put that front and centre we have to see.”
Government sources have insisted that the NHS would be a red line for the UK, as it was during the FTA negotiations under the previous Government.
David Henig, a trade expert at the European Centre For International Political Economy, warned the UK against watering down its own standards or taking too soft a line on tech to avoid tariffs, warning it could jeopardise the Brexit reset: “The UK government needs to be ready with both the offer of specific deals and retaliatory tariffs given the sheer unpredictability of Trump – but make sure not to compromise the UK regulatory approach or relations with European trade partners in particular.”
And Ben Ramanauskas, a former official in the Department for International Trade, suggested mirroring Trump’s transactional approach to trade – by promising that the UK will source more equipment from SpaceX, the technology company owned by Elon Musk. He wrote in a blog post this week: “Given that Musk is less than enamoured with the UK Government at present, this could be a good way to build bridges.”
The climate may be even trickier territory: Trump, who has shown little interest in tackling global warming, immediately withdrew the US from the Paris climate agreement. Adair Turner, who formerly led the UK’s Climate Change Committee, said this week that “you are living in delusion land” if you do not believe that the President’s actions will harm the global fight against higher temperatures – estimating that Trump’s return will add at least 0.2 degrees to the minimum possible level of temperature increases over the coming years.
Gareth Redmond-King of the Energy and Climate Intelligence Unit was less pessimistic, saying: “It is obviously not great that the world’s biggest economy, and second biggest emitter, pulls out of the Paris agreement. But it wasn’t particularly disruptive last time, it didn’t lead to others causing mischief or leaving.”
He predicted that the UK would work more closely with other powers – not only the EU but also China, India and Brazil – to fill the gap, adding: “It’s about how that global leadership comes together and shows a moral example.”
This time it’s different
Even though Trump has already spent four years in the White House, some experts warn that this time around may not be simply a repeat of the first term. Olivia O’Sullivan of Chatham House told The i Paper: “I think we should not assume it will not just be like last time, there is a different and more determined coalition around Trump.”
She warned: “It is difficult, there are not easy answers to the US stepping back from what has been quite a significant role from some of this architecture.” Meanwhile Byrne was more upbeat about the prospects of his party’s leader navigating the tricky balance of getting close to Trump while also insuring the UK against a US withdrawal from the geopolitical front line.
“He can absolutely find a middle path and and that’s what he will do, and it’s perfectly possible,” the Labour veteran said. “So ultimately, we have to bring together trade policy and economic security. That’s what UK grand strategy has always done at its best over the last four centuries, and we’ve just got to reinvent that for new times.”
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