Mercantilist Diplomacy: The UK’s Transatlantic Dilemma
Tom Hayward | 7 April 2025
Summary
The United States’ (US) transactional foreign policy challenges the United Kingdom’s reliance on a special relationship rooted in shared values and strategic interests.
The UK faces a strategic dilemma, caught between diverging US and European geopolitical interests.
British Prime Minister Keir Starmer has sought to maintain warm relations with Washington but faces the likely imposition of wide-ranging tariffs on the UK.
The United Kingdom (UK) is experiencing a significant diplomatic challenge as its traditional values-based alliance with the United States (US) transforms into a more transactional, power-driven relationship. US President Donald Trump has fundamentally reshaped US diplomacy, adopting a mercantilist approach that threatens the special relationship.
The Trump administration’s approach to diplomacy represents a stark departure from previous norms, prioritising hard bargaining and immediate national interests over long-standing alliances and principles. This poses substantial challenges for the UK, which risks losing diplomatic influence and strategic positioning if it fails to adapt to this new environment.
The growing rift between US and UK diplomatic actions and rhetoric underscores the challenges for Starmer’s foreign policy. While the UK has maintained its position of strong support for Kyiv, the Trump administration has transformed US policy towards Ukraine. The US has sided with Russia in votes at the United Nations against resolutions supporting Ukraine’s territorial integrity. In unprecedented scenes at the White House, meanwhile, Trump and his Vice President J.D. Vance attacked Ukrainian President Volodymyr Zelensky for a perceived lack of thanks for US support provided to Ukraine since Russia’s invasion.
Starmer has sought to position the UK as a bridge between the US and Europe, reminiscent of the UK’s historical role in transatlantic relations. The Prime Minister has also utilised strategic flattery, leveraging the British monarchy’s soft power by presenting Trump with an invitation for a second state visit to the UK.
However, the UK’s balancing act is coming under strain in an increasingly unpredictable diplomatic landscape. Vance has made clear his disdain for European allies, suggesting that the greatest threat to the continent is “from within”. Senior US administration officials have also lambasted “European free-loading” and discussed how to “remunerate” the US for the cost of military action in Yemen in leaked group chat messages. Comments from Washington, both in private and public, indicate a worldview that fundamentally challenges traditional transatlantic alliance principles.
Critical strategic partnerships across areas, including intelligence sharing and military cooperation, are now subject to greater scrutiny from Washington. This shift poses significant challenges for the UK’s recently announced defence budget increase, as uncertainty over US reliability could necessitate greater independent capabilities and diversification of defence partnerships. The UK faces difficult decisions about whether to continue investing heavily in US-dependent capabilities or divert resources toward developing autonomous and European-partnered alternatives.
The Five Eyes intelligence-sharing pact represents a critical strategic asset for the UK, providing unparalleled access to global intelligence sharing. Yet its continuance has come under question as concerns have mounted that the US may not be a reliable intelligence partner. The temporary halting of intelligence sharing to Ukraine raised fears that the US could weaponise intelligence sharing to other allies in order to leverage concessions on matters such as trade and sanctions. This uncertainty may force the UK to increase investment in its own intelligence capabilities and strengthen bilateral intelligence arrangements with other partners, particularly within Europe and the Commonwealth. Senior German lawmakers have floated the concept of a ‘Euro-eyes’ European spy network to reduce reliance on American intelligence capabilities.
While the UK Ministry of Defence (MOD) recently reaffirmed its commitment to its F-35 procurement programme, Trump has threatened to sell “toned-down” jets to allies in the future because “someday, maybe they’re not our allies”. Subsequently, NATO member Portugal expressed hesitancy at acquiring American F-35 fighter jets due to “the recent position of the United States, in the context of NATO”, while Canada’s defence minister stated that he would examine “other alternatives” to the F-35.T he F-35 situation reflects decades of US technological dominance which has resulted in deep dependencies among allies. Routes for greater UK strategic independence, such as through the Tempest fighter programme, complicate the UK’s efforts to modernise its military capabilities and threaten to sap any financial benefits from the government’s recent defence spending increase.
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Forecast
Short-term (Now - 3 months)
The UK will very likely continue to leverage soft power mechanisms such as the monarchy to gain favour with the Trump administration and seek exemption from US tariffs on Europe.
It is unlikely that British diplomatic efforts will result in exemption from US tariffs despite ongoing negotiations. Tariffs would have a high impact on Chancellor Rachel Reeves’ efforts to create stable economic growth.
Medium-term (3-12 months)
The UK will likely continue to seek a narrow trade deal with the US centred around technology in the hope that a deal would insulate the UK from global trade tensions.
Long-term (>1 year)
Shifts in US foreign policy priorities will likely force the UK to place greater emphasis on relationships with European and Commonwealth countries.
The UK-US relationship will likely continue to take priority in British diplomatic efforts, given its vital importance to the UK’s national security and prosperity.
