Return to Trump – what are the key issues from a UK and European perspective?

Donald Trump, the 45th and now 47th President of the United States, has returned to the White House promising to “put America first.” Trump’s agnosticism toward international cooperation, as well as his prioritisation of national interests over global issues, will likely have a significant impact on America’s relationship with traditional allies and international bodies. Below are some of the key issues, from a UK and European perspective, in the President’s in-tray.

Trade Tariffs
Trump has promised to address “unfair and unbalanced trade” and has launched the External Revenue Service to “collect tariffs, duties and other foreign trade related revenues.” We await further details. His nomination of Scott Bessent as Treasury Secretary relieved some fears, as he was seen as more moderate than other candidates for the role. Despite this, the president has already targeted Mexico and Canada, threatening to cancel the trade deal he himself signed during his previous term. Renaming the Gulf of Mexico as the Gulf of America on his first day in office, are just some of the types of statements we are to expect.

There is genuine concern about how Trump would behave towards the UK should the Labour Government make economic and diplomatic decisions of which he disapproves, such as closer involvement with the EU or a warmer relationship with China. These are two actions that the Starmer Government has pursued in recent weeks, with the Prime Minister meeting European Commission Chief Ursula von der Leyen to reset UK-EU relations and seek a closer relationship with the bloc. Chancellor Rachel Reeves has also recently visited China, celebrating closer financial services links and agreements worth £600 million to the UK economy over the next five years. The UK will not want to be forced to choose sides by the incoming administration. Starmer’s Government will have to carefully navigate a path between the US and the EU, pragmatic co-operation with China, and as a result, hope that Trump does not push ahead with a blanket tariff on imports.

A UK-US Trade Deal
Understandably, Britain’s Prime Minister, Sir Keir Starmer, has already signalled that one of his key priorities will be to secure a UK/US trade deal, promising to “invest more deeply than ever in the transatlantic bond with our American friends.” The UK Government is reportedly optimistic about the chances of a good relationship with the new administration, with Chief Secretary to the Treasury, Darren Jones, using the weekend media round to highlight "opportunities for us to seize" around a potential post-Brexit trade deal. Technology, unsurprisingly, is of a particular focus.

Whether this resonates on the other side remains to be seen. While Trump has a more favourable stance towards the UK than Biden, a state visit, given Trump’s admiration for the Royal Family, may shed some clarity on the future of the relationship. Starmer will need to tread carefully here, as this could play badly with the Labour base.

Accepting the new British Ambassador to the US
Before Christmas, the Prime Minister announced the appointment of Lord Peter Mandelson as the UK’s Ambassador designate to Washington. Mandelson is Labour’s former Director of Communications, a Blairite, and one of several key people responsible for the rebranding of ‘New’ Labour before its victory at the 1997 General Election. A former Cabinet Minister under Tony Blair and Gordon Brown, as well as a former European Commissioner, he is currently President of the international think tank Policy Network and Chairman of strategic advisory firm Global Counsel.

His extensive experience and political nous would make many think that this is a smart political appointment by Starmer. However, there has been some speculation that Trump may refuse this appointment. Mandelson’s ratification could be conditional on dropping the UK’s deal with Mauritius over the Chagos Islands. Regardless, a key challenge, will be to build bridges and trust. Mandelson will likely need to enlist the assistance of both Reform Party leader Nigel Farage and Trump’s new Department of Government Efficiency’s Elon Musk, to help achieve this, which he will understandably be reticent to do.

The future of NATO and Ukraine
During his first term, Trump’s relationship with NATO was defined by his outspoken criticism of the alliance. He described NATO as a group of “delinquent” allies exploiting America’s generosity, calling on all countries to at least meet the minimum commitment of 2% of GDP spending on defence.

As Trump returns to power, NATO's future remains uncertain. Although European allies have notably begun to increase defence spending – in the UK the Labour Government has expressed a desire to reach 2.5% but set no deadline - Trump’s new demand for 5% creates additional pressure on countries with tighter financial resources. His hardline stance on burden-sharing could drive further division within the alliance, especially as the US shifts its focus towards addressing domestic issues and, of course, countering China. In relation to Ukraine, Trump will be keen to force both Moscow and Kyiv to agree to something that he can portray as a deal.

Future of Net Zero in doubt
By quitting the Paris Agreement in his first day in office, Trump has signalled the beginning of an aggressive agenda to undo US climate policy. The US will now have to wait a year until it is officially out of the pact. The President has also announced a “national energy emergency” to reverse many environmental regulations, promising to embark on a “new age” of oil and gas exploration. In contrast with the UK and rest of Europe, the Electric Vehicle Mandate, has been scrapped. Without US leadership, the world will fall further behind the goal of limiting the Eather’s global warming to 1.5 degrees. The UK and the EU will need to play a leading role on the global stage.

Peace in the Middle East
Finally, Trump’s second term in office is poised to have significant repercussions for Israel and the wider Middle East. Trump prides himself on being a “dealmaker” and has already taken great credit for the ceasefire deal between Israel and Hamas, stating that he was “the closer.” The President has stated that he will seek peace and negotiate further deals to ensure to safety of all Americans and its allies. This transactional approach that defined the majority of his first term, such as with the acceptance of the Abraham Accords, is likely to continue in the years to come.

With over half the world going to the polling booths last year, a new US administration, the first full year of a UK Labour Government and a new European Commission, this is truly a year of enacting change on the global political stage. Rud Pedersen is uniquely positioned as Europe’s leading public affairs and strategic communications consultancy, with expert teams in London and 19 other cities. If you would like to discuss how Rud Pedersen can help you approach these challenges across various markets, get in touch at londonoffice@rudpedersen.com