Is it really a choice between Europe and America?

Three months of a second Trump presidency has upended three decades of the global order. While both sides of the political left and right in western politics had slightly different approaches to achieving their own goals, there has, until now, been a neo-liberal consensus that free trade across nations was a force for good; a mechanism for growing the economy; a method of making us (mostly) all wealthier.

Those days are now over.

A sea change for world trade

2025 marks the 30^th anniversary of the creation of the World Trade Organization, the international trade body which, with 164 member countries, sets the base rules for around 98% of global trade. The United States was a founding member of the WTO and highly influential in its development and the creation of a global convention for trade – a rules-based system, which offered stability and, for the most part, growth.

President Trump has all but turned his back on this system; criticising globalisation, citing it as a cause of economic hardship for the US – a claim which should be fact checked: the US is today the largest economy in the history of the world.

While there’s been significant back-pedalling from the White House, with a “90 day pause” on higher tariffs for many countries across the world, the US has nevertheless proceeded with a 10% blanket tariff on almost every trading nation – including the UK – in a move that’s received with widespread criticism and has wiped trillions of dollars from global stock markets.

We’re now likely to see a period of gradual, yet further, back-pedalling from the US administration as the reality that tariffs will have on American consumers sets in; with higher inflation expected and many predicting the probability of an economic recession – both domestically for the US, as well as globally.

It’s worth noting at this point that some companies have stopped trading with the US altogether, while they assess the situation. Jaguar Land Rover has reportedly halted all exports to the USA for four weeks in response to Trump’s 25% tariff on imported vehicles, while Mercedes-Benz said it would absorb the cost for its 2025 vehicles and not pass it on to American consumers.

What now for Starmer?

The situation presents a tricky landscape for UK prime minister Keir Starmer to navigate. The UK has a historic and meaningful marriage with the USA, often affectionately referred to as the special relationship. Our economy and defence intelligence are intertwined and inseparable. However, Trump’s tariffs will severely damage key industries across the UK, including, famously for Scotland, whisky and salmon exports. Meanwhile there is a potential growth opportunity to be had with better trading ties with the European Union, in a customs union / single market free trade arrangement.

In a press conference this week (14 April), Scottish first minister John Swinney called for the UK Government to respond to the economic unrest caused by the United States by aligning the UK’s economy more closely with the European Union’s. While there was little more detail than that in the speech, the SNP has long campaigned for re-entry into the EU, or at the very least for single market / customs union membership.

Trump notoriously dislikes the European Union; his initial higher rate of tariffs were set to impose a 20% tax on all EU imports to the USA, but he then lowered this to his standard 10% for “90 days” after his plans spooked the markets (few anticipate, with the turmoil in domestic markets, that he will raise this tariff again – but with Donald Trump, who really knows!). That said, his hatred for Europe doesn’t bode well for how he might react to prospect of the UK moving closer to the EU. As Trump dangles the carrot of a trade deal with the US in front of Starmer, many speculate the prime minister may eventually have to pick a side: will it be America, or Europe?

There appears to be a growing demand for the UK to align more closely with the European Union as a potential solution to offsetting the damage Trump’s trade policy will have. A recent YouGov poll found that 53% of people in the UK want to see a closer trading relationship the EU, with a UK-US trade deal ranked one of the lowest priorities for voters.

A simple choice?

If the choice was as binary as that, Europe or America, the choice is simple and easy: Europe, every time. Our closest geographical neighbour is also our closest trading partner, accounting for 42% of all the UK’s exports in 2023 – valuing at £356 billion. Exports to the USA, by contrast, valued at £60.4 billion.

But the reality is the choice isn’t binary, or simple, or easy. While the USA is a much smaller customer of UK / Scottish goods and services than the EU is, our friends across the pond import nearly £1 billion of Scotch Whisky per year, and account for around a quarter of all Scottish Salmon exports. Like it or not, the USA is crucial trading partner, without which significant players in Scotland’s most iconic industries would be substantially impacted.

Starmer is walking a very fine tightrope, balancing the needs of the UK economy with the whims of an unpredictable president in Washington. A closer relationship with the EU is an obvious solution, but there are clear limits in the current geopolitical situation. A customs union, while many consider it desirable, might not be entirely feasible under a Trump presidency – as removing trade barriers with the US must also be a priority.

The whole world is coming to terms with an unpredictable presidency in the United States, one which threatens the global order and undermines economic progress. Starmer’s role must be to create as much stable space for the UK economy to grow healthily. For better or worse, in sickness and in health, the UK is wedded to the United States in a special relationship which may at times be fraught but breaking it would be messy and cause yet more economic pain.

Whether he likes it or not, the legacy of Starmer’s premiership will be decided by how he navigates a Trump presidency - but the good news is he only has three years and nine months of it left.

Lee Robb.

Policy + public affairs strategist.

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