Diplomacy is a tightrope for Britain’s Starmer following President Trump’s abuse

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dispatch

British diplomats have long prided themselves on their so-called “special relationship” with the United States.

The phrase was coined by Winston Churchill, Britain’s inspirational wartime leader, when he famously described how the “Iron Curtain” descended across Europe in March 1946.

His speech was delivered at Westminster College in Fulton, Missouri, then-President Harry Truman’s hometown, and Truman was shown a copy in advance.

Churchill warned of the threat to democracy posed by the Soviet Union: “Neither the sure prevention of war nor the continued rise of a world organization can be obtained without what I call the fraternal association of English-speaking peoples.”

“This means there is a special relationship between the Commonwealth and the Empire and the United States.”

Many other countries are proud of their special relationships with the United States, including Israel and Canada, both of which have previously used the term.

France is often referred to as the United States’ “oldest ally,” and former President Joe Biden used this phrase in December 2022 when he welcomed French President Emmanuel Macron to the White House as his administration’s first state guest.

But nothing is as formal as the “special relationship” between the United States and Britain. It is based on close security and intelligence ties forged during the Cold War, and even enjoys nuclear cooperation agreements and a deeply integrated defense-industrial complex.

Ironically, while countless U.S. presidents have used the term, no one has cited it more often than President Donald Trump.

Last September, the White House also released a fact sheet titled “The Special Relationship,” declaring that “the bond between the United States and the United Kingdom is unparalleled anywhere in the world, and we remain friends.”

All of this has left Prime Minister Keir Starmer walking a tightrope as he responds to Trump’s threat to impose tariffs on eight European countries, including the UK, from next month unless they back his desire to buy Greenland.

Unlike French President Emmanuel Macron, who called on the EU to deploy “anti-coercion measures” against the United States, which seems unthinkable but nevertheless reflects the EU’s position, Mr. Starmer said he would not support retaliatory tariffs if Mr. Trump pushed through with his proposed surcharges, insisting that “tariff wars are in no one’s interest.”

And while Prime Minister Starmer made it clear that “any decisions about Greenland’s future status belong solely to the people of Greenland and Denmark,” his speech on Monday was careful to highlight the benefits of the UK-US close partnership and the values ​​our two countries share.

Mr Starmer added: “We must always remember that it is in our national interest to continue to cooperate with the United States in defense, security and intelligence.”

It was deft diplomacy, even if it added to the perception among domestic critics that “Never Here Kiir” was spending more time on diplomacy than on domestic issues.

That was also bold. Many in Mr Starmer’s Labor Party will want the prime minister to take a tougher, Macron-like line against Mr Trump. The same is likely true for many British citizens.

A man yelled “Leave Greenland alone” as actress Vanessa Williams sang the American national anthem at London’s O2 Arena before the NBA game between the Memphis Grizzlies and the Orlando Magic on Sunday night, drawing applause from the crowd in what appeared to be a positive attitude towards American culture.

Skeptics include some in the Foreign Office (Britain’s equivalent of the US State Department), who strongly dislike Starmer’s attempts to cajole Trump, including inviting him on an unprecedented second state visit.

But most people in the department recognize the value of Mr Starmer maintaining a close, if highly unpredictable, relationship with someone who will at least answer the phone and talk to him.

But that debate risks dooming after President Trump posted on social media early yesterday accusing the UK of ceding the Chagos Islands – an Indian Ocean archipelago that has been British territory since 1814 – to Mauritius as “an act of great stupidity and utter weakness”. This was despite Trump himself saying when the announcement was made last February that he had “a feeling it’s going to go very well.”

Their relationship will also be put to the test after Britain yesterday approved the construction of a new Chinese “mega embassy” on the outskirts of London, despite reports of White House concerns about the proximity of sensitive data cables connecting the Square Mile’s financial services industry.

limited options

Nevertheless, Mr Starmer’s approach can also be seen as very pragmatic in that he recognized that the UK, which is outside the EU’s single market, would be unable to significantly harm the US with tariffs, given the difference in the size of the two countries’ economies.

In fact, the UK’s product exports to the US in 2024 will total $68.2 billion, so there is a lot to lose.

This is particularly true of Britain’s beloved car industry, which sold 10 billion pounds ($13.4 billion) worth of goods to the United States in the 12 months to the end of June last year, making it Britain’s single biggest exporter outside of the pharmaceutical industry, which is now exempt from tariffs under a deal signed last month.

The agreement was hailed as a huge success at the time, particularly for unlocking investment potential in the UK by US pharmaceutical companies. bristol myers squibHowever, the extent to which Greenland-related tariffs may be imposed remains unclear.

Opinion is divided over whether new tariffs on top of the 10% already applied to British goods could push Britain into recession. Consultancy Capital Economics believes the policy would cut between 0.3% and 0.75% of the UK’s GDP and could trigger a recession if applied too quickly.

However, others do not agree with this. “A flat 10% tax on around £60bn of goods is not significant enough to change the broader growth outlook for 2026,” Simon French, chief economist and head of research at investment bank Panmure Liberum, tweeted.

He suggested that a more “logical European strategic response” would be to retaliate on the capital account.

Europe’s NATO countries hold $2.8 trillion worth of US debt, including $889 billion in the UK alone. If President Trump carries through with this latest threat, he should be wary of the possibility of a resurgence of the “non-U.S.” trade seen since “Emancipation Day” on April 2 last year.

The market is already showing glimpses of it.

Danish pension operator Academia Carpension has announced that it is selling $100 million in U.S. bonds. Anders Schelde, the fund’s investment director, said the reason was “poor governance and finances (in the US)”, but said tensions with the US “did not make it difficult to take the decision”.

Meanwhile, investors on Tuesday fled U.S. assets, selling stocks, bonds and the dollar and turning to safe-haven assets such as gold and silver.

If Europe continues to flee from American capital, it will certainly be more effective than self-inflicted retaliatory tariffs.

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Chris Southworth, director general of the British International Chamber of Commerce, called on European countries to focus on diplomacy as President Trump threatens to impose additional tariffs on Greenland.

Danish foreign policy expert Sten Rinning warns that Europe needs to prepare for a trade war with the United States over Greenland.

Jane Foley, head of currency strategy at Rabobank, discusses the latest UK GDP figures for November, which were better than expected.

— Holly Ellyatt

need to know

President Trump has launched a fierce attack on Britain. The so-called “special relationship” between the United States and Britain was left bruised on Tuesday after President Trump slammed London’s decision to transfer sovereignty over the Chagos Islands to Mauritius.

Britain is trying to cast a spell on President Trump to defuse the threat of Greenland tariffs. Starmer told a press conference on Monday that while Britain highly values ​​its long-standing special relationship with the United States, only Greenland and Denmark can decide on the island’s future.

Could the UK ban social media for under-16s? Australia’s social media ban for under-16s has attracted global attention, with governments around the world considering introducing similar policies, with the UK seen as likely to be next.

— Holly Ellyatt

Quote of the week

at the market

British stocks have edged lower over the past week as President Donald Trump has become increasingly vocal about European countries, citing resistance to his stated goal of absorbing Greenland into the United States.

of FTSE100 It stood at 10,126.78 on Tuesday, down 0.67% from 10,137.35 a week ago.

Meanwhile, the Office for National Statistics’ employment figures showed the unemployment rate remained flat at 5.1% in the three months to the end of November, and the pound recovered against the US dollar. The pound, which fell earlier this week, was valued at $1.3435 against the dollar on Tuesday, compared with $1.3418 last Wednesday.

Elsewhere, the UK government’s benchmark 10-year bond yield (a.k.a. gold leaf — rose to 4.464% on Tuesday, compared to 4.359% last Wednesday.

— Hugh Leask

very soon

January 21st: UK inflation rate for December
January 22: January retail sales
January 23: GfK Consumer Confidence for January

— Holly Ellyatt