The next government faces an unpredictable US and a more assertive China. Both countries are becoming harder to deal with individually, and their rivalry complicates other UK calculations. The response to a more isolationist US must be to increase cooperation with Europe, while a first step in managing China-related risks is to coordinate better between UK government departments.
Managing the US relationship
If the UK election is in the autumn, a new prime minister will walk into 10 Downing Street just before or after the US presidential election. The incoming prime minister should recognize that this most enduring of UK relationships – that with the US – is changing, and that the trend will continue to some degree regardless of the US election outcome. Donald Trump is the presumptive Republican candidate, and the race against President Joe Biden will be tight. The UK should not deceive itself about its waning influence in the US, but there are some options the British government should pursue whoever next occupies the White House.
The ‘special relationship’ has endured through many US presidencies. It is based on common history, language and culture. The US and the UK have one of the world’s closest intelligence-sharing partnerships. They are embedded in NATO and the Five Eyes alliance, have worked jointly on many military operations, cooperate on nuclear deterrence and share critical technologies, including through the trilateral AUKUS partnership. These alliances and links are likely to continue after November 2024, though some might need careful ‘selling’ in the event of a Trump presidency.
A Trump administration would present the transatlantic relationship with immediate jolts given his professed scepticism about the US’s role in upholding world order. A full withdrawal from NATO seems unlikely, especially as Congress has passed measures barring presidents from unilaterally pulling the US out of the alliance, but Trump has said repeatedly he would re-evaluate the US’s role. Some see this as rhetoric aimed at pressuring European governments to increase their military spending, but others suggest a second Trump term would weaken American commitment to the principle of collective defence under NATO.
On Ukraine, US military aid has so far been decisive in enabling Ukraine to resist Russia. Yet while support in principle for Ukraine is widespread in Congress, including among Republicans, funding has been hostage to political battles. After much wrangling and delay, the US Congress recently approved new spending for Ukraine (see also Chapter 3) – Trump, however, advocates significantly reducing US military aid to the country. On trade, some advisers close to Trump propose tariffs and radical decoupling of the US economy from China. Based on his record in office, Trump might again take the US out of the Paris Agreement on climate change. He might side with Israel so emphatically over the West Bank and Gaza that talk of a two-state solution to the crisis becomes impossible. In the Middle East, he pulled the US out of the Joint Comprehensive Plan of Action (JCPOA), the 2015 agreement to restrain Iran’s nuclear programme. In doing so, he enabled Iranian proxies to further consolidate their role in the region.
The immediate decisions for the UK in the event of a Trump presidency would be whether to maintain or increase spending on Ukraine, and how to help British businesses handle tariffs. Generally, the UK might hope to act as a moderating voice, urging consistency and engagement in the US’s international relationships. But in a second term, Trump and his supporters might be restrained by fewer dissenting influences than in his first. Many established US defence and foreign policy officials who were part of his first administration have broken with him, and some supporters have suggested he will use ‘Schedule F’ powers to fire and hire federal workers – making the US defence and foreign policy bureaucracy more politicized and less predictable.
Questions also loom for the UK if the Democrats win. While Biden is committed to helping Ukraine fight Russia, the unfolding crisis in the Middle East has strained US foreign policy bandwidth and risks diluting US support for Ukraine. It is clear that even a new Biden administration will aspire to spend more time on Indo-Pacific security and less on European matters.
Generally, it is hard to argue that the UK retains much influence over the US. The UK needs to focus on defining its own interests and pursuing them, while urging the US to continue to play a stabilizing international role.
Biden’s administration has also been no fan of untrammelled free trade or bilateral trade deals; the UK has little prospect of securing a comprehensive free-trade agreement (FTA) with the US, even though that goal was talked up by many in the UK as the pinnacle of a post-Brexit trade strategy. If Biden wins, given that a traditional FTA is unlikely, then the UK’s best option would be to build on the 2023 US–UK Atlantic Declaration to develop smaller-scale partnerships on critical technologies and minerals. This could include pursuing exceptional eligibility for subsidies and benefits, under the US’s Inflation Reduction Act, that are normally available only to countries with FTAs or other specific trade agreements with the US. It could also involve further developing shared approaches to critical technologies under Pillar 2 of AUKUS. A Labour government might find common ground with a Biden administration around the idea of a ‘foreign policy for the middle class’, whereby international trade would be managed more actively through industrial policy and its benefits distributed more equitably at home. Such an approach could involve the pursuit of sector-specific deals with protections for UK workers.
Generally, however, it is hard to argue that the UK retains much influence over the US. The Biden administration’s precipitate exit from Afghanistan, against UK recommendations, underlined that point. In the US, there is some clear public and political questioning about whether America should retain a broad and active international role. While the UK can make the case for continued international support for Ukraine, it should not expect this to change US policy. The UK needs to focus on defining its own interests and pursuing them, while urging the US to continue to play a stabilizing international role.
Managing the China relationship
The UK has not found it easy to strike the right balance towards China in the last 15 years: wanting trade, seeking discussion on global problems, yet increasingly recognizing the need to protect itself from theft or coercion. That is complicated further by the US’s concerns about China. The next US administration, whether under Biden or Trump, is likely to strengthen trade and investment barriers against China, including export controls and restrictions on certain types of foreign investment.
One immediate question for the UK will be how to forge its own course if Washington calls on it to align with US measures against China, as happened when Downing Street came under pressure to excise Huawei from the UK’s 5G telecoms infrastructure. The UK should aim to make choices based on a clearer assessment of its own economic security than in the past.
China presents the UK with huge opportunities and direct risks. A US intelligence official has compared Russia to a ‘hurricane’ and China to ‘climate change’. Whereas Russia in this telling is immediately destructive, the effects of Chinese actions on international order are ‘long, slow, pervasive’. This suggests the UK must take a long-term view to protecting itself from China, including shoring up UK capacity to manage cyberattacks, interference and economic coercion.
At the same time, Western economies are too intricately connected with China for full-scale ‘decoupling’ to be feasible, or even desirable. China is too globally influential to ignore, despite the currently challenging outlook for its economy. In addition to maintaining trade, the next UK government will need to keep important discussions going with Beijing on global problems such as climate change, technology governance and developing-country debt. Both main UK political parties are right to emphasize that they will pursue a balance between caution and engagement in dealing with China. The challenge for the next UK leadership will be how to extract enough security and commercial consistency from this approach.
In addition to maintaining trade, the next UK government will need to keep important discussions going with Beijing on global problems such as climate change, technology governance and developing-country debt.
The risks of economic disruption from China should be kept in proportion. China accounts for an important but limited share of UK trade. In 2022, the UK’s trade in goods and services with China was worth £113 billion, about 6.5 per cent of total UK trade. That contrasts with £772 billion in trade – 44 per cent of the total – between the UK and the EU over the same period. Moreover, China is unlikely to sacrifice its own prosperity through a deliberate loss of export revenue unless it perceives itself to be under threat. This suggests the risk of China comprehensively cutting off the supply of critical goods in the event of political or economic tensions with the UK is low.
Nonetheless, while the UK’s services-dominant economy is in some ways less entwined with China’s than European comparators are, China is deeply integrated into global consumer and industrial supply chains. China also dominates markets for some critical minerals and technologies needed for the net zero transition. It has throttled the supply of important components, or blocked access to its own market, during disputes with Australia, Canada, Lithuania and South Korea; it has also restricted trade as part of its own economic ‘de-risking’ policies when faced with US and European curbs on access to key equipment and material. In 2023, following the Netherlands’ imposition of curbs on the sale of chipmaking equipment overseas, China restricted exports of gallium and germanium (key components in some microchips). While such moves may have little impact on global supply, they are a warning of potential future patterns of trade-disrupting behaviour.
The UK’s trade links with China differ from those of EU countries, nor does it face the same risks as Japan or South Korea. But in the event of escalating US–China conflict or trade disruption, the UK would be affected all the same. This is of particular concern given that the UK lacks a clear strategy defining tolerable exposures to overseas suppliers and is not currently in a strong position to pool supply-chain risks with buyer countries. The UK government has issued limited, sector-based strategies for its supply chains: on critical minerals in 2022 (updated in 2023) and semiconductors in 2023; it published a broader strategy on critical imports and supply chains in January 2024. But it lacks an overarching economic security strategy, such as that announced by the EU in June 2023. Parliamentary committees have consistently criticized the government for lacking clarity about implementation of these strategies and, in some cases, such as with the UK’s critical minerals strategy, for lacking specific supply targets. In contrast, the EU’s Critical Raw Materials Act of 2023 established a target that no more than 65 per cent of the EU’s annual consumption of each strategic raw material – at any stage of processing – should come from a single third country. Similarly, Japan and South Korea have extensively mapped their supply-chain vulnerabilities in a way the UK has not, and have tasked strategic economic security committees or ministries within government with assessing the risks. Though the UK has undertaken ad hoc assessments, it needs to build a stronger picture of its critical import dependencies.
The UK would benefit from closer links with allies on these issues. Though it is part of the US’s Minerals Security Partnership, it could coordinate further with the EU on the latter’s planned Critical Raw Materials Club, which will focus on security of supply in materials for batteries and green technology. The UK risks being cut out of broader plans by the EU and US to merge the two initiatives and combine their management of critical mineral dependencies. Although the UK may find it difficult to get admitted to a partnership of this nature, it might also be able to liaise more closely with the EU-US Trade and Technology Council (TTC), which manages similar risks. At a minimum, the UK could seek better coordination between the TTC and other forums like the G7 – which recently stated its ambition for supply-chain diversification following its 2023 Hiroshima meetings. The next UK government might also refine its approach to inward investment, which – as in the months-long decision over Chinese investment in the Newport Wafer Fab semiconductor plant – has been slow and under-resourced. Increasing the government resources available to review investment deals and improving communications with industry would help.
One way to promote a more coordinated China strategy across government could be to create a central policy unit, emulating the ‘China House’ model recently adopted by the US State Department.
More broadly, the government needs better analytical and decision-making capabilities to manage the challenges presented by China. There are not enough Mandarin speakers and other China specialists in the civil service, and Treasury teams and other departments have at different times taken contrasting positions on the economic benefits versus security risks of trade and investment involving China. More coherence on the approach to China is needed, along with more resources. One way to promote a more coordinated China strategy across government could be to create a central policy unit, emulating the ‘China House’ model recently adopted by the US State Department; another could simply be to designate clearer political leadership on China within government, especially on managing the risks of economic ties.
The pipeline of research and pool of expertise on China are limited in the UK. One estimate suggests the UK has fewer than 1,500 undergraduates a year on China-related courses. Increased funding and support for more technical and policy research on China could help ensure UK decision-makers have a better understanding of key issues, such as the UK’s economic dependencies on China in specific sectors, or the precise nature of Chinese state-owned enterprises’ links to the Chinese government. While internal government capabilities on China have been boosted recently, public and political debate often relies on US, European and Australian research on such questions.
The next government also needs to articulate its approach to China more publicly. The UK does not have a published, unclassified China strategy, beyond statements made in the Integrated Review Refresh. This limits the ability of non-government stakeholders, the media and society to understand how the government is managing policy trade-offs. It risks reducing the credibility of foreign policy decisions – or leaving their motives open to misinterpretation. The government would benefit from publishing a strategy akin to that of Germany.
The UK’s relationship with India could be valuable in helping to manage China risks. Relations with India have been strengthening, and talks to conclude a UK–India FTA (delayed partly by wrangling over intellectual property rights, especially in pharmaceuticals) have made some progress. An FTA would strengthen long-standing ties between the UK and India, supported by family contacts (the ‘living bridge’, as Sunak has called it), despite continuing tension over the colonial legacy. India is consciously forging relationships – including with the US – to bolster its own position against China. For this and on many other points of common interest, the next UK government should spend time on this relationship.
