LONDON — They always come crawling back.
Following a messy divorce with the EU, the U.K. had banked on its “special relationship” with the U.S. forming the cornerstone of its post-Brexit “Global Britain” foreign policy. Now London is reassessing its options.
As U.S. President Donald Trump takes the world economy on a rollercoaster with his unpredictable tariff regime, Britain’s Labour government is increasingly turning to old flames like the EU and India.
But securing any meaningful agreements will take more than just good will on the U.K. side, as it faces having to make concessions that are deeply unpopular at home.
Addressing carmakers in the West Midlands on Monday after the U.S. slapped the industry with 25 percent tariffs, a resilient Prime Minister Keir Starmer insisted Britain would “keep calm and fight for the best deal with the U.S.”
“But we’re also going to work with our key partners to reduce barriers to trade across the globe,” he said. “Accelerate trade deals with the rest of the world and champion the cause of free and open trade — right across the globe. And just like car building, that has always been our heritage — and we won’t turn our backs on it now.”
Free trade talks with India and the Gulf Cooperation Council are the most advanced, while revamped deals with Switzerland, South Korea, Israel and Turkey are also in the works. The U.K. is also making steady progress on a post-Brexit “reset” with the EU ahead of a major EU-U.K. summit in May.
Speaking earlier this week, Trade Secretary Jonathan Reynolds said the U.K. had “leveraged the difficult situation with the U.S. to advance all these talks.”
It’s a far cry from Labour’s rhetoric pre-election, when it insisted it would be taking a more minimalist approach to free-trade agreements.
The one that got away
Trump’s escalating trade war — as well as his moves to distance himself from Europe’s security — have given added impetus to U.K. plans to “reset” its sometimes fraught relationship with the European Union.
Speaking on Wednesday, Chancellor Rachel Reeves said the new international reality made a tighter relationship with Brussels “imperative,” arguing that there was scope to improve the situation for British businesses who “feel shut out of European markets.”
What this actually looks like will become clearer on May 19 when EU leaders decamp to London for a major summit on cross-channel relations.
So far, a new U.K.-EU security pact has emerged as the key agenda item. While it’s at an early concept stage, such an agreement could create new opportunities for joint investments in arms, as well as for closer cross-channel cooperation between U.K. and EU defense industrial firms.
London is also keen to sign a U.K.-EU veterinary deal that would reduce border checks on trade by harmonizing standards for animal and plant health. Brussels is open to the idea but has warned it would likely require the U.K. to peg itself to EU standards.
Improvements on trade in services are also in Starmer’s sights, notably the mutual recognition of professional qualifications and simpler conditions for British artists touring in the EU.
All these asks are complicated by Labour’s red lines that rule out participation in the EU single market, customs union or free movement.
Trump’s trade wars have also created another more urgent incentive for the U.K. to rekindle its relationship with Brussels. A complicated post-Brexit settlement in Northern Ireland means EU retaliatory tariffs on the U.S. will apply in the territory, creating a fresh headache for importers in the region.
Addressing MPs on Tuesday, Northern Ireland Secretary Hilary Benn dangled the possibility of an improved trade deal with the EU as a potential remedy.
“Members from Northern Ireland have on many occasions raised the consequences of the current arrangement,” he said, adding that things could “get a lot easier” if the U.K. secures a veterinary agreement.
From fizzle to sizzle
Another key priority for British negotiators is wrapping up talks with India.
New Delhi’s Finance Minister Nirmala Sitharaman visited London this week for negotiations with British Chancellor Rachel Reeves and trade chief Jonathan Reynolds. Alongside trade talks, the two sides are also pushing to sign a bilateral investment treaty.
“There is a great sense of positivity and also eagerness and dedication to have this concluded sooner rather than later from both the sides,” Sitharaman told reporters at a joint briefing following the discussions.
But Trump’s trade war won’t see India “rush” into a deal, Sitharaman told an audience at India’s High Commission the day before. While she and Reeves both said progress was made, thorny issues remain.
The U.S. tariffs mean that striking a deal “has gone up the scale in terms of political priorities,” Shashi Tharoor, chair of the Indian parliament’s committee on external affairs, told POLITICO. “We all need buffers against the global trade uncertainties that have suddenly shot up in people’s consciousness,” he added.
Yet Tharoor points to several “stumbling blocks” remaining in the talks, including business mobility visas, the U.K.’s plans to tax Indian steel and other high carbon emissions commodities at the border, and intellectual property.
British officials took an upbeat tone this week, telling the Guardian that visa mobility issues had largely been resolved. But one person close to negotiations, granted anonymity to speak freely, said that was “not so accurate.”
“We would simply like larger quotas for professionals, particularly in sectors like IT and healthcare,” Tharoor added. “But [U.K.] domestic political concerns about foreigners coming into the country would certainly be a stymying factor. So if the U.K. can’t give in on those areas as much as India would like, then what else can the U.K. offer?”
If Delhi and London are able to strike a deal, he said, both countries “should, in theory, be able to double” their annual bilateral trade of $50 billion. “But that requires a lot more flexibility on both sides,” he said.
Still, British officials were buoyed by Reynolds’ visit to Delhi to re-launch negotiations in February, after they fizzled out under the previous Conservative government over similar concerns over issues like migration and better access for services firms.
Officials have told businesses of a “step change” in talks since the visit, said a senior British business representative briefed on the negotiations, who was granted anonymity to speak on the sensitive talks.
“There’s a sense that the Indian government just wants to get something done and over the line now,” they said. “That may be part of their sense about where the geopolitics is. You need the extra trade growth from wherever you can get it.”
A gulf apart
Things are also heating up between the U.K. and the Gulf Cooperation Council trading bloc — a six-member bloc including Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and United Arab Emirates — as the countries negotiate a free trade agreement.
While rounds are no longer being formally counted, there has been a flurry of activity since Labour resumed talks in September 2024, with a GCC delegation visiting London in January and the U.K.’s chief negotiator visiting Riyadh in February. In more recent months, however, the focus has moved away from an FTA toward plugging investment opportunities.
But appetite for a full-fat FTA seems to have returned post-tariffs. In a sign of Britain’s willingness to strike a deal, Starmer on Wednesday put in a call to Saudi Arabia’s Crown Prince Mohammed bin Salman, where the PM “reiterated his commitment to working closely with international partners to maintain global economic stability.” Tellingly, the leaders also “agreed to build on the good progress so far on the U.K.-GCC free trade agreement.”
A figure briefed on negotiations told POLITICO: “There’s always been quite a deep appetite for a GCC deal even before Trump. It’s now just got added priority. I would have thought the U.K. needs this deal, so they’re going to roll over a bit more. The quicker you can get this one in place, the better. Because it’s a big market.”
But if successful, Labour would have a hard time selling any deal to its traditional union base, which has voiced serious concerns about the environmental record and human rights abuses in Gulf countries.
Hey Canada, u up?
The U.K. has shown an interest in reopening trade talks with Canada, which is bearing the brunt of Trump’s tariff raid.
It was former Prime Minister Justin Trudeau who first raised the prospect of resurrecting talks with the U.K., which collapsed under the previous Conservative government after a long-running battle by Canadian farmers to get hormone-treated beef into Britain.
In an interview with POLITICO earlier this year, Canadian High Commissioner to the U.K. Ralph Goodale said the U.K. and Canada have a “great opportunity and a great reason to work really hard at trade diversification,” in light of U.S. tariffs.
He called on the U.K. to get back to the negotiating table after London walked away from bilateral trade talks last January.
“It would be helpful to take another go at that and see what we can accomplish in the shortest possible time,” Goodale said. “If we can add on to it, so much the better.”
The U.K. has confirmed it is considering the proposal, but has yet to give it the green light.
Playing the field
While the U.K. continues to deepen its ties with trading partners, it hasn’t given up hope of securing a deal with the U.S.
One government figure — granted anonymity to speak freely — said the key areas of negotiation, at least in the short term, are now set to be around the steep sectoral tariffs of 25 percent on steel and automobiles.
But given how unpredictable Trump’s tariff policy has been in recent months, the U.K. would be wise not to pin all its hopes on the possibility of a deal.
In an abrupt turn, Trump last night announced a 90-day pause on the implementation of higher reciprocal tariffs, with the exception of China, leaving trade negotiators across the globe scratching their heads as to what could come next.
For now, playing the field might be the U.K.’s best option.
Andrew McDonald contributed reporting.
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