The Return of the Special Relationship…

 – Or Just the Shape of Trade to Come? 18th June 2025 While all eyes at the G7 summit were trained on the West’s fractured response to the escalating crisis in the Middle East, a quieter but potentially more consequential event took place on the sidelines. The United Kingdom and the United States finalised a long‑anticipated bilateral trade agreement—a milestone that may signal not only a new phase in transatlantic relations, but also a broader reshaping of global trade norms in an era defined by protectionism, realpolitik, and shifting alliances. A Deal for the Times The trade deal, while modest in scope, is politically significant. It reaffirms the mutual recognition of standards in critical sectors such as pharmaceuticals, financial services, and data flows. It also streamlines customs procedures and seeks to reduce certain non‑tariff barriers that have emerged post‑Brexit. Importantly, it locks in preferential terms for select British exports—steel, whisky, and automotive parts among them. But the concessions haven’t all been one‑way. The UK has agreed to allow greater access for certain US agricultural products, and has aligned with Washington’s digital‑service standards—seen by many as a departure from the EU’s more stringent regulatory model. While the British government is touting the agreement as a “pragmatic and future‑facing pact”, some in Westminster are privately acknowledging it as a necessary compromise to maintain relevance in a world where multilateralism is faltering. A New Bilateral Era? This agreement may well be a harbinger of things to come. With the World Trade Organization increasingly sidelined and the multilateral order under strain, bilateral treaties are fast becoming the architecture of modern commerce. As the Trump administration doubles down on “America First” trade policies, countries like the UK find themselves negotiating from a weaker hand—but with greater flexibility. Bilateralism allows for bespoke agreements, faster turnarounds, and the potential for more innovative cooperation, particularly in tech and green‑energy sectors. Indeed, Washington is currently in informal talks with India, and has floated trialling sector‑specific pacts with select Indo‑Pacific nations. It’s no coincidence that a resurgent United States is choosing bilateral forums over multilateral platforms—the former provides leverage, while the latter demands compromise. For the UK, this means recalibrating its post‑Brexit trade strategy to favour agility over alignment. The US deal may soon be followed by refreshed terms with Canada, Japan, and perhaps even Australia. And although a comprehensive UK–EU trade upgrade remains unlikely under current circumstances, incremental sectoral add‑ons are not off the table. Starmer: Picking Up the Pieces or Stooping to Conquer London Ascendant The political subtext of the US–UK deal is just as noteworthy as its commercial implications. Keir Starmer’s government has made no secret of its ambition to rekindle the so‑called “Special Relationship”—but with a more grounded, less romanticised approach than past governments. Recent moves point to the UK becoming a go‑to diplomatic interlocutor for Washington. Earlier this year, when the US sought a neutral location to initiate talks with China on reopening commercial aviation routes and managing export controls, it didn’t choose Geneva, Brussels or Berlin. It chose London. That decision speaks volumes. As The Economist recently noted, “The UK is rapidly positioning itself as America’s most reliable European partner,” with one unnamed senior US official remarking, “We know where we stand with London—especially under Starmer.” Adding further weight, Chancellor Rachel Reeves described Britain as an “oasis of stability” for investors, citing the new US trade deal as reinforcing that confidence. Nevertheless, not everyone is convinced. Critics warn that “transactionalists cannot be trusted in dealmaking,” pointing out that by aligning too closely with a fiercely transactional Washington, “once we have agreed to Plan A… it will be very hard for us to resist a subsequent and more damaging Plan B.” In a sense, Britain is playing the long game: embedding itself as indispensable to both Washington’s economic ambitions and its broader geopolitical strategy. The Cost of Relevance Of course, such positioning comes with trade‑offs. Critics argue that the UK is playing junior partner to an increasingly transactional America—repeating concerns that echo decades of scepticism. Others contend that in a world trending towards regional blocs—the EU, ASEAN, Mercosur—Britain’s choice to pursue bilateralism might limit its influence in the long term. Still, for the moment, the strategy appears to be paying dividends. The US deal may not be the grand free‑trade agreement once promised during the Brexit campaign, but it represents a tangible pivot away from isolation and towards strategic engagement. It’s not perfect. It may not even be entirely fair. But in a fragmented global economy, it may be the best available option. More importantly, it signals that Britain is prepared to act—not just as an independent trader, but as a key geopolitical player in an increasingly uncertain world.