The article explores the potential opportunities for the UK to strengthen its economic ties with the US under the new administration. It highlights the importance of aligning with US interests, particularly in areas such as technology and trade, to avoid the tariffs faced by the EU. The author emphasizes the need to understand and cater to the demands of US big tech companies, while also recognizing the need for a balanced approach that avoids being overly subservient.
There may be some ways in which we can avoid getting clobbered by US tariffs because we don’t, in Trump’s view, treat the US badly like the EU. “They’re going to be in for tariffs. You can’t get fairness unless you do that,” he said of the EU on Tuesday. But the UK is no longer in the EU. We have not been mentioned by Trump as a potential target for trade restrictions – at least not yet.
That creates an important way forward for Britain in its relationship with America that we can turn to our advantage. Indeed, the signs are that we are already doing so. The leaders of the Magnificent Seven, the hi-tech giants that dominate the US economy and its stock markets, are massively supportive of this new, tough-minded administration. You saw that in the line-up at the inauguration – it wasn’t just Elon Musk in attendance, but Jeff Bezos, Mark Zuckerberg and Google’s Sundar Pichai too. If you want good economic relations with the US you have to listen to what big tech America wants, and big tech America does not go a bundle on our Competition and Markets Authority (CMA). So the government has to tread carefully. That’s a stark way of expressing it, and there are other wider factors at work. The CMA has been under pressure more generally to take action to promote growth, rather than using its regulatory power in ways that might curb it. Sir Keir Starmer was critical of the CMA, but there is no doubt that the CMA has been under attack from big tech companies who have warned that its actions make the UK less attractive. It forced Microsoft to restructure its bid for Activision Blizzard last year, for example. Though the Microsoft president, Brad Smith, has softened the way he originally said that it made the EU “a more attractive place to start a business” than the UK, but recently said it had been “tough and fair” – the writing was on the wall. The appointment of Doug Gurr as acting chair. Being head of the NHM is a more fun job, but if he were prepared to stay with the CMA I’m sure they would love him to do so. The timing is important. It shows the new president that we really want US big tech to thrive in the UK. The green light for a new third runway at Heathrow and a second at Gatwick would be another signal that inward investment is welcomed, though the largest shareholders in both airports are a mixture of international investors rather than American ones. If – and let’s wait and see – the government shifts its position on further development of North Sea oil and gas fields, then that too would be another sign that we are falling in line with what the new administration sees as important. The US has been steadily increasing its share of foreign direct investment here. The US contribution to the EU's foreign direct investment stock peaked in 2020 at around 29 per cent. Its role has been increasing, for back in 2013 the US owned only a quarter of foreign direct investment here, whereas the EU accounted for half. So trying to boost inward investment is very much a pitch to the US, because that is where the growth has been coming from over the past decade. So what else can we do to align ourselves with America? It’s very simple. This is a supremely transactional relationship. There may be some ways in which we can avoid getting clobbered by US tariffs because we don’t, in Trump’s view, treat the US badly like the EU. But the much more important thing is to look at the areas where our interests align with theirs, and work with the US to prise open markets that are currently restricted. The prime example of that is global trade in services. The US is the world’s largest exporter of services; the UK is the second largest. Since Brexit the EU has sought to exclude London from selling financial and other professional services across Europe, which has been a pain for the US enterprises that had based their European business here. That should be reversed, and we should use US clout to get it reversed. Even more important will be the whole range of services associated with generative artificial intelligence. The US big tech companies Some of these are sensible, some onerous. Our key aim here should be to create an AI-friendly zone for US companies in the European time zone. That does not mean doing everything big tech wants. But it does mean understanding what matters and what doesn’t – which is why that Doug Gurr appointment is really important. We don’t need to be craven to this new administration in America. You don’t get respect that way. But we need to be recognised as their friends in Europe, people who treat them well – not “very, very badly”. Our relationship with the new American administration is hugely important in all sorts of ways, and I do think we should see this change of mood in Washington as an opportunity rather than a threat. For a start, in broad macro-economic terms it is better to link as far as we can with fast-growing economies rather than slow-growing ones.
UK US Trade Tariffs Brexit Technology Big Tech Competition And Markets Authority Artificial Intelligence
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