Britain seeks tech alliance with US to bypass trade tariffs

The Keir Starmer government in the United Kingdom is tying its hopes for closer economic relations with the US to a trade agreement.

According to POLITICO, a document prepared by the United Kingdom outlines the country’s goal of an “economic partnership” on technology.

In the document, Britain notes that the two countries are the only allies in the world with a trillion-dollar technology industry, arguing that it is vital for “Western democracies to defeat their rivals.”

London had previously stated its aim to target advanced missions in artificial intelligence, quantum, and space. The document remains vague on these missions, mentioning cooperation in research and development, talent, and procurement as the first phase of the partnership.

It is noteworthy that Britain’s presentation does not address thorny issues such as customs tariffs and regulations for now, but tariffs may come to the fore starting Wednesday, when 25% steel and aluminum taxes will come into effect. UK negotiators are pressing for a last-minute exemption.

This move also reflects some parts of the Atlantic Declaration signed by the former leaders of the two countries, Rishi Sunak and Joe Biden, in June 2023. In this agreement, they decided to “partner to build resilient, diversified, and secure supply chains and reduce strategic dependencies.”

However, the latest document, which officials hope will pave the way for an agreement this year, is much narrower in scope and more suitable for Trump; it does not mention working together on clean energy or health issues, which were included in the Atlantic Declaration.

This language seems likely to please key figures in and close to the US administration, including Vice President JD Vance, Palantir CEO Alex Karp, and Michael Kratsios, the general manager of Scale AI who joined the White House as director of science and technology policy, who have spoken of the need for “Western democracies” to win the technology race.

Trump, who met with Starmer last month, said the chances of the United Kingdom and the US reaching an agreement were “very high.” This is a priority for the United Kingdom’s Ambassador to Washington, Peter Mandelson, who refers to the agreement as “MEGA” (Make Our Economies Great Again).

But according to POLITICO, Mandelson brings more than Trump-friendly acronyms to the table and is well-positioned to build good relationships with key decision-makers in the US.

The lobbying firm founded by Mandelson, Global Counsel, counts Palantir as a client. Palantir’s founder, Peter Thiel, was one of Trump’s first supporters, and Starmer, National Security Advisor Jonathan Powell, and Mandelson met with Alex Karp in February.

Mandelson resigned from Global Counsel before being appointed, but it was reported that he still had shares in the company in late January.

Vance, who would play a role in any deal, also has close ties to Thiel, while Kratsios was Thiel’s chief of staff earlier in his career.

The argument that the West needs to work together to win the technology race was also recently voiced by United Kingdom Technology Secretary Peter Kyle, including in a speech at the Munich Security Conference.

“It is extremely important that Western liberal democracies lead the race in these technologies,” Kyle said in a statement to the BBC last month.

The United Kingdom’s presentation document does not elaborate on this theme, but it uses language aimed at appealing to the US administration, talking about combining the “strengths” of the two countries so that “Western democracies” can win the technology race.

There is nothing in the document about more immediate gains, such as a digital trade agreement or specific investments, but it opens the door to agreements between the United Kingdom government and US technology firms by increasing procurement. Both Scale AI and Anthropic are employing staff in the United Kingdom to sell their technology to the public sector.

An industry source told POLITICO that the United Kingdom wants to conclude the deal quickly and that national security, covering all three areas, will be a big part of it.

United Kingdom officials want the agreement to build on AUKUS, the military alliance between Australia, the US, and the United Kingdom, which already includes working together on artificial intelligence, quantum, and space.

The document shows that the United Kingdom is seeking to get even closer to the US on technology, which Vance said in a speech at the Paris AI Action Summit in February that he wanted to see from his allies.

The United Kingdom refused to sign the Paris AI Summit declaration, renaming its AI Safety Institute the “security institute” and joining the US by putting its AI legislation plans on the back burner.

Britain’s AI strategy relies on foreign investment to build its infrastructure, and a government official told POLITICO that the US is one of the few places this capital could come from.