Recalibrating UK-US Business Relations in the Era of Donald Trump 2.0 How is the task of recalibrating UK-US business relations in the era of Donald Trump 2.0 best approached?

Navigating an "America First" trade landscape
Donald Trump's "America First" agenda has returned, and UK businesses must prepare for another shift in transatlantic trade relations. The agenda that defined Trump's first term is likely to return with an intensified emphasis on domestic manufacturing, protectionist trade policies, and sector-specific deregulation. For UK companies operating in or exporting to the US, this shift presents both challenges and opportunities for strategic growth. The UK remains America's largest single trading partner outside the EU, accounting for 17.6% of total UK trade as of Q2 2024. However, navigating the evolving political and economic landscape means UK firms must reassess their US strategy, focusing on resilience, market diversification, and proactive engagement.

Shifts in US trade policy
During his first term, Trump withdrew from multilateral trade agreements, imposed wide-ranging tariffs, and renegotiated NAFTA into USMCA. The UK-US free trade agreement (FTA) was discussed post-Brexit, but it stagnated and failed to materialise under Biden's administration. The prospects for a deal remain uncertain under Trump's leadership. A Trump-led trade agenda is likely to prioritise bilateral agreements that strongly favour US interests. This could mean a renewed emphasis on "Buy American" policies, potential tariff increases, and regulatory shifts that make market access more complex for foreign firms.

A strong UK-US trade foundation – despite uncertainty
Despite policy uncertainty, the UK's economic ties with the US remain deeply embedded, particularly in high-growth sectors such as artificial intelligence, green energy, and cybersecurity. The UK's AI sector is projected to contribute £232 billion to the economy by 2030, aligning with US priorities on technological innovation. The US has invested heavily in clean energy infrastructure, presenting opportunities for UK firms specialising in offshore wind and carbon capture. Meanwhile, the rising emphasis on digital security in both public and private sectors could drive increased demand for UK firms with expertise in cloud security, AI-driven risk management, and encryption technologies.

At the same time, UK exporters must monitor currency fluctuations. A stronger US dollar will make British goods more competitive. There are four key priorities that UK businesses must focus on to mitigate risks and capitalise on opportunities in a second Trump presidency:

1: Diversification of markets
While the US will remain a key trading partner, UK businesses should diversify their market exposure to reduce reliance on a single economy. Expanding trade relationships with Europe, the Middle East, and other high-growth regions could create new opportunities and enhance economic resilience. Participation in agreements such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) opens doors to fast-growing markets and strengthens the UK's position in global trade. This strategy not only mitigates risks from shifting US policies but also enables UK firms to capitalise on the region's expanding economic opportunities.

2. State-level engagement
As federal policies become more protectionist, direct engagement with individual US states could provide an alternative route for UK businesses seeking market access. Many states have distinct economic priorities, creating opportunities for sector-specific partnerships. For example, California remains a global hub for technology, AI, and renewable energy, while Texas leads in advanced manufacturing, energy, and logistics. New York continues to dominate financial services and fintech innovation, and Florida is emerging as a fintech hub and gateway to Latin American trade. By aligning with state-level economic initiatives, UK firms can navigate federal trade barriers and position themselves within high-growth industries.

3. Establishing a physical presence in the US
For industries vulnerable to tariffs and regulatory restrictions, establishing a US-based presence could be a key strategic advantage. Companies in pharmaceuticals, manufacturing, and fintech could benefit from localised production hubs, ensuring smoother market access while aligning with Trump's protectionist economic policies and "Buy American" incentives.

4. Embracing digital transformation
Digital trade presents a major strategic advantage for businesses seeking to bypass traditional trade barriers. UK firms in e-commerce, SaaS, and fintech should focus on scaling their US presence by investing in online platforms, digital payment solutions, and AI-driven services. Strengthening capabilities in cybersecurity, cloud infrastructure, and regulatory compliance will further enhance competitiveness in an increasingly digitalised economy.

In conclusion, the evolving trade landscape under a second Trump presidency offers both challenges and significant opportunities for UK businesses. As the US returns to an "America First" agenda, UK companies will need to adapt to shifting policies and leverage new strategies to stay competitive. Although protectionist measures, tariffs, and a focus on domestic manufacturing may complicate market access, these very shifts present chances for innovation and growth in sectors that align with both UK strengths and US priorities.

The UK's emphasis on high-growth sectors like AI, green energy, and cybersecurity positions it to play a key role in the US market, provided it can navigate the changing regulatory environment. By diversifying markets and reducing reliance on the US alone, UK businesses can build greater resilience and open new pathways to growth. Engaging directly with US states, where economic interests can vary widely, may also prove beneficial. States like California, Texas, and New York continue to drive innovation in their respective fields, offering opportunities for UK businesses to establish themselves within specific, fast-growing sectors.

Moreover, establishing a physical presence in the US and embracing digital transformation could enable UK firms to tap into the market in ways that bypass traditional trade barriers, capitalizing on the digital economy's explosive growth. By committing to innovation, digital transformation, and strategic partnerships, UK companies can position themselves as leaders in the global market while adapting to the unique challenges of the Trump administration's economic policies. Ultimately, a recalibrated partnership between the UK and the US, one grounded in agility and forward-thinking collaboration, could enable the UK to play a pivotal role in shaping global economic growth, even in the face of trade uncertainty.