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British diplomats have long taken pride in their so-called “special relationship” with the United States.

The phrase was coined by Britain’s inspirational wartime leader Winston Churchill, who famously described how the “Iron Curtain” descended across Europe in March 1946.

his speech The book was published at Westminster College in Fulton, Missouri, the hometown of then-U.S. President Harry Truman, who received a copy in advance.

Warning about the threat posed by the Soviet Union to democracy, Churchill said: “The prevention of war cannot be ensured, nor the continuous rise of the world organization possible, without what I call a fraternal alliance of the English-speaking peoples.

“It means a special relationship between the Commonwealth and the Empire and the United States.”

Many other countries are proud of their special relationship with the United States, including Israel and Canada, both of which have used the term before.

France is often described as America’s “oldest ally,” a phrase used by former President Joe Biden in December 2022 when he hosted French President Emmanuel Macron at the White House for his administration’s first state visit.

But no “special relationship” is as formal as that between the United States and Britain, which is built on close security and intelligence ties forged during the Cold War and which share a nuclear cooperation agreement and a deeply integrated defense industrial complex.

Ironically, while countless U.S. presidents have used the term, no one invokes it as often as President Donald Trump.

Last September, the White House even issued a fact sheet titled “The Special Relationship,” declaring: “The United States and the United Kingdom are connected like no other in the world, and we will always be friends.”

All of this leaves Prime Minister Keir Starmer walking a tightrope as he responds to Trump’s threat to impose further tariffs on eight European countries, including Britain, from next month unless they support his desire to buy Greenland.

As French President Emmanuel Macron urged the EU to deploy “anti-coercion tools” against the US – which may seem implausible but reflects the position the EU finds itself in – Starmer said he was not in favor of retaliatory tariffs if Trump went ahead with his proposed tariffs, insisting “a tariff war is not in anyone’s interest”.

And, while making clear that “any decision on Greenland’s future status belongs solely to the people of Greenland and Denmark,” Starmer was also careful to emphasize the benefits of Britain’s close partnership with the United States and the two countries’ shared values ​​in his speech on Monday.

Starmer added: “We must always remember that it is in our national interest that we continue to work with the Americans on defence, security and intelligence.”

It was skillful diplomacy, although it would add to the perception among domestic critics that “Kir was never here” to spend more time on foreign affairs than domestic matters.

It’s also bold. Many in Starmer’s Labor Party want the prime minister to take a tougher, more Macron-like line on Trump. So did much of the British public.

Actress Vanessa Williams sang the U.S. national anthem at the O2 Arena in London on Sunday night before an NBA game between the Memphis Grizzlies and Orlando Magic when a man shouted “Leave Greenland alone” and was applauded by the audience, which could be seen as a sign of goodwill towards American culture.

Skeptics also include some in the Foreign Office, Britain’s equivalent of the U.S. State Department, who strongly dislike the way Starmer flatters Trump, such as by inviting him to an unprecedented second state visit.

However, most people in the department recognize the value of Starmer having a close relationship with someone who, despite his extremely unpredictable behavior, will at least pick up the phone and speak to him.

However, this argument risks being completely destroyed when Trump posted on social media earlier yesterday, accusing Britain of “an act of extreme stupidity and complete weakness” in ceding the Chagos Islands, an Indian Ocean archipelago that has been a British territory since 1814, to Mauritius. Although Trump himself said he had a “feeling that things were going to go well” when the announcement was made last February.

Britain yesterday approved a new Chinese “mega embassy” on the outskirts of London, where the relationship will also be tested, despite reports that the White House is concerned about the site’s proximity to sensitive data cables linking London’s financial services industry.

Limited choice

Still, Starmer’s approach could also be seen as eminently pragmatic, recognizing that the UK – which sits outside the EU’s single market – cannot do much damage to the US through tariffs, given the difference in size between the two economies.

In fact, UK merchandise exports to the US will total US$68.2 billion in 2024, and the UK will suffer huge losses.

This applies especially to Britain’s much-loved car manufacturing industryThe company sold 10 billion pounds ($13.4 billion) worth of goods to the United States in the 12 months to the end of June last year, making it the UK’s largest single exporter outside the pharmaceutical industry, which is currently in deal struck last month.

The deal was hailed as a huge success at the time, not least because it unlocked potential investment in the UK from US drugmakers, e.g. Bristol-Myers SquibbBut the scope of Greenland-related tariffs remains unclear.

Regarding whether the new tariffs will be 10% already applied to UK products — could tip the UK into recession. Consulting firm Capital Economics believes that UK GDP will be cut by 0.3%-0.75%, which if implemented quickly may trigger an economic recession.

But others disagree. Simon French, chief economist and head of research at investment bank Panmure Liberum, said on Twitter: “A 10% tariff on around 60 billion pounds of goods would not be enough to change the overall growth outlook for 2026.”

He suggested that “a more logical strategic response from Europe” would be capital account retaliation.

European NATO countries own US national debt worth $2.8 trillion, of which the UK alone has $889 billion. If Trump goes ahead with this latest threat, be on the lookout for “Beyond U.S.” trade It appeared after “Liberation Day” on April 2 last year.

The market has seen this.

Danish Pension Operator academic pension say yes Sale of $100 million in U.S. Treasury bonds. Anders Scheldt, the fund’s head of investments, said this was because of the “poor financial position of (U.S.) governance” but that tensions with the U.S. “did not make the decision any more difficult”.

at the same time, Investors fled U.S. assets on TuesdaySell ​​stocks, bonds and the U.S. dollar and turn to safe-haven investments such as gold and silver.

If Europe continues to flee American capital, that will surely be more effective than self-inflicted retaliatory tariffs.

CNBC Hot TV Picks

Chris Southworth, secretary-general of the British Chamber of International Commerce, has urged European countries to focus on diplomacy as President Trump threatens to impose additional tariffs on Greenland.

Danish foreign policy expert Sten Reining warned that Europe should prepare for a trade war with the United States over Greenland.

Jane Foley, Head of FX Strategy at Rabobank, discusses the latest UK GDP data for November, which came in better than expected.

— Holly Elliot

need to know

Trump launches tirade against Britain. so-called “Special relationship” Relations between the United States and Britain looked scarred on Tuesday after Trump launched a tirade against London’s decision. Transferring sovereignty over the Chagos Islands to Mauritius.

Britain hopes to cast a spell on Trump and defuse the threat of Greenland tariffs. Starmer told a press conference on Monday that the UK attached great importance to its long-term special relationship with the United States, but that Only Greenland and Denmark can decide the island’s future.

Could the UK ban under-16s from using social media? Australia’s social media ban on children under 16 has attracted global attention, with governments around the world considering similar policies. The UK is considered likely to be next.

— Holly Elliot

Quote of the week

in the market

British stocks edged lower over the past week as Trump stepped up his rhetoric against European countries that resist his stated goal of annexing Greenland to the United States.

this FTSE 100 It fell 0.67% to 10,126.78 on Tuesday, down from 10,137.35 a week ago.

Meanwhile, the pound recovered against the dollar as the Office for National Statistics employment data showed the unemployment rate remained unchanged at 5.1% in the three months to the end of November. GBP/USD rose to $1.3435 on Tuesday after falling earlier in the week, compared with $1.3418 last Wednesday.

Elsewhere, the yield on the UK government’s benchmark 10-year bond, also known as gilt — It rose to 4.464% on Tuesday, compared with 4.359% last Wednesday.

— Hugh Lesk

coming soon

January 21: UK inflation rate in December
January 22: January retail sales
January 23: GfK January consumer confidence index

— Holly Elliot