Donald Trump's tariffs are a problem but the US can still be our greatest ally

Donald Trump’s announcement of reciprocal tariffs has sent shockwaves through global markets, with the FTSE 100 Index plunging nine percent over just three days. Yet amid the volatility lies a strategic opportunity for the United Kingdom. Chief Secretary to the Treasury Darren Jones has acknowledged that the era of globalisation as we knew it is over, while Prime Minister Starmer observed that “the new world is less governed by established rules and more by deals and alliances”.

As the UK continues to chart its post-Brexit economic course and the White House embarks on what the US Treasury Secretary has described as a “global economic reordering,” policymakers in London should consider pursuing closer economic ties with Washington — with the aim of removing the 10 percent reciprocal tariff the US has levied on British goods.

The Prime Minister was right to point out that the United Kingdom already maintains a balanced trading relationship with the United States. As former US Trade Representative (USTR) Robert Lighthizer noted, between 2010 and 2021, US-UK trade produced seven years of surpluses for America and five for the UK — a sign, he argued, that “this is how trade is supposed to work”.

The United States remains the United Kingdom’s largest export market for goods and services, as well as its top source of imports. In my latest report for the Henry Jackson Society, Advancing the “Special Relationship” During the Second Trump Presidency, I outline how the Trump administration’s multi-pronged use of tariffs — to reduce the trade deficit, counter Chinese influence in North America, preserve the US dollar’s role as the global reserve currency, and enhance export competitiveness through dollar adjustment — poses clear challenges for the United Kingdom.

London must now reassess its economic relationship with Washington amid a rapidly evolving global trade landscape.

An escalation of the trade war would not serve the United Kingdom’s best interests. Beijing’s planned retaliation — a 35 percent tariff on US exports to China — triggered a threat from President Trump of an additional 50 percent tariff on Chinese imports into the United States, further distorting global equity markets.

As I note in the report, the UK, unlike the US, is neither a monopolist nor a monopsonist; its leverage in this escalating trade conflict remains limited. Therefore, the following steps are suggested to ease tensions on both sides of the Atlantic and deepen economic ties.

First and foremost, the UK government should appoint a chief trade negotiator at the Permanent Secretary level. The departure of Crawford Falconer, who had served in the role since 2017, and whose contract was not renewed, drew sharp criticism from the Shadow Business Secretary, who called the decision “staggering” in the wake of Donald Trump’s re-election. A seasoned civil servant is needed, who can navigate the political and economic sensitivities with the White House’s trade advisors.

Second, the United Kingdom should seek to negotiate a free trade agreement with the United States by working with the Trump administration to zero tariffs and address key concerns related to market access and non-tariff barriers. In its 2025 National Trade Estimate report, the Office of the US Trade Representative flagged several ongoing issues, including restrictions on American agricultural exports, the UK’s digital services tax, and copyright concerns — particularly around the remuneration of US musical artists for radio broadcasts and public performances in the UK.

Peter Navarro, the US President’s senior counsellor for trade and manufacturing, has called non-tariff policies “worse” than tariffs, as American trade partners use them to “wall off their own markets”.

Finally, once structural trade issues are resolved between the United States and the United Kingdom, London should consider the strategic possibility of integrating into the broader North American economic bloc — encompassing the United States, Canada, and Mexico.

Economist Oren Cass, described as a “leading apostle of new conservative economics”, has argued that North America represents “the obvious core of a US-led [trading] bloc” and “an obvious inflection point for the American approach to economic alliances.” With the Trump administration accelerating the 2026 review of the US-Mexico-Canada Agreement (USMCA), some have suggested that the United Kingdom explore potential membership in the pact as part of that process.

Given that the United States is the United Kingdom’s largest trading partner, that the UK shares deep cultural and linguistic ties with two of the three USMCA members, and that the USMCA bloc now surpasses the European Union in overall GDP, it would behoove the UK government to explore options for integrating into this broader US-led trading bloc — both for economic advantage and strategic defense alignment.

The Special Relationship, albeit imperfect, continues to endure. While the White House and 10 Downing Street may not always align on foreign policy or social issues, deepening economic cooperation is vital for the transatlantic partnership.

By coordinating policy on mitigating economic dependency on China, complementing defense capabilities, and aligning on any future policy related to US dollar overvaluation, the US and UK can reinforce their partnership in an increasingly multipolar world.