22
Examination of witnesses
Anton La Guardia, Edward Luce and Gerard Baker.
Q35 The Chair: Good morning. Thank you very much for joining us. We may be joined by Anton La Guardia during the course of our meeting. We are welcoming Gerard Baker and Edward Luce to our meeting. Thank you so much for coming before us. This is our fourth public evidence session on the UK’s future relationship with the US, and we are very much looking forward to hearing the perspectives of journalists.
The session is being streamed live on the Parliament website. A transcript will be taken; once available, you will be sent copies of it. I remind members that when they speak, if they have interests, they should declare them before speaking. May I invite each of you to introduce yourselves briefly and then, if we may, rather than having lengthy opening statements, can we pile in with questions? Gerard, would you like to introduce yourself?
Gerard Baker: Thank you very much indeed for having me this morning. It is a pleasure to be here. As you heard, I am editor‑at‑large of the Wall Street Journal. I write a weekly column for the Wall Street Journal and a weekly column for the Times here in London. I also have a podcast. I was previously the editor-in-chief of the Wall Street Journal and, before that, the deputy editor-in-chief. Previously I worked for the Financial Times, the BBC and elsewhere.
In my capacity at the Wall Street Journal I had the honour and privilege, I should say, of moderating one of the first presidential debates that Donald Trump appeared in back in 2015. I think I was the first foreigner to take part in a debate. I survived that experience and I am here to tell the tale. Thank you again for having me.
Edward Luce: Likewise, it is a pleasure to be here virtually. I am the US national editor and chief columnist on America for the Financial Times. I was previously bureau chief here in Washington DC, and in various other places including New Delhi. Somewhat oddly for a journalist, I was speechwriter to Larry Summers, the US Treasury Secretary in the Clinton Administration, so I have some US governmental experience. I am also a book author. My next book, which is a biography of Zbigniew Brzezinski, Henry Kissinger’s great rival and grand strategist of US geopolitics, is coming out in May. It is a pleasure to be here and I am delighted to take your questions.
The Chair: Thank you so much and we will check Amazon for the book. Thank you for joining us so early in your day.
Edward Luce: Not at all. Forgive me for the plug.
Q36 The Chair: Take every chance. Perhaps I can kick off. It has been suggested to us that there is a generational divide in American attitudes to the United Kingdom, in that people over 60 feel closer ties to Britain, while younger generations do not feel that connection in the same way. Can you give us a view as to what is driving this and how the UK should promote itself to young Americans? Shall we start with you, Edward?
Edward Luce: I pondered that question and then did a little bit of research and asking around. I do not see any reflection in polling, in Pew attitude polls for example, that there is a rising disaffection for Britain among younger Americans. I do not hear any of that anecdotally, either. Britain continues culturally and as an historic force to loom extremely large in American minds, and I have not seen any lessening of that in recent years or among younger Americans. I do not have any particularly valuable insights to add on that, because I do not accept the premise of the question.
Gerard Baker: I disagree. I similarly did a little bit of research and came up with something. Since we are on the topic of declaring interests, I should have said at the beginning that I am a dual British and American citizen, having become a US citizen recently. Relevant to this question, I am also over 60.
There was an Emerson College poll in 2024, which asked people how they viewed America’s relationships with other countries, and 44% of Americans under 30 viewed the relationship with the United Kingdom as very important. For those over 70, 74% regarded it as very important.
I do not think that is surprising at all. Many of that older generation will have spent some time in Europe, a lot in the UK, probably more than younger Americans, but more importantly, they come from that generation, forged particularly in the Cold War and its immediate aftermath, where the importance of the transatlantic relationship was widely understood and shared. The success of the British‑US relationship in that period was obviously pivotal to helping win the Cold War, and that is reflected in that opinion. People under the age of 30, literally born after the Cold War, have very little experience of that and have been exposed to a completely different set of questions about geopolitics.
One other thing I found was that people were asked, on a differential by age, what they view as threats to America’s interests. This was a poll by the Chicago Council on Foreign Relations two years ago. For example, they were asked whether Russia’s territorial ambitions were a threat to the United States. For older generations, again, 72% of over-50s said it was, but for millennial and Gen Z generations, only 47% or 48% said it was.
Again, the geopolitical changes in the world that have occurred over the last 30 years inevitably are reflected in different attitudes that Americans by generation have towards the relationship with the UK.
Q37 Baroness Blackstone: Could you tell the committee whether you think the culture wars and the polarisation of domestic opinion in the US are a threat to the US‑UK relationship?
Gerard Baker: They are, yes. When Vice-President JD Vance went to Munich last month and gave that very controversial speech, that was the topic in very large part that he focused on, in talking about the threat to democracy in Europe as he saw it. He singled out the UK, particularly on the issue of freedom of speech.
That is one of the principal dividing lines in American politics right now. It is obviously very important in this country too. The Trump right has the sense that Europe, including the UK, has become prey to, if you like, all the various ills of multiculturalism and the suppression of traditional Western values. You hear about these things all the time from the Trumpian right. That is very much a reflection of how certain people—not all people by any means, but certainly Trump supporters—see many countries in Europe, including the UK.
It is also partly an explanation for what is often seen, understandably, as an inexplicable enthusiasm that some on the right in the US have for Russia. They see Russia as being a better defender and protector of traditional cultural values, shall we say. As implausible as that may be factually, it is undoubtedly a perception that is held.
In that respect, the culture wars, if you want to call them that—these different cultural values, the different perceptions of how important they are or should be in American life, and, in particular, the way in which they are seen as being undervalued, suppressed or devalued here in the UK—are quite a significant factor.
Edward Luce: I broadly agree with that. I would add that Vance is clearly much more sceptical of Britain than Trump. Trump still has a soft spot. In his terms, you could probably describe him as an Anglophile, chiefly expressed through golf and liking being hosted by the Royal Family. It does not go very deep and it is not very sophisticated, but Trump does have a soft spot for Britain that Vance goes out of his way not to exhibit.
What I would add to that is Elon Musk. Elon Musk is a huge cultural force and a huge algorithmic promoter of views that he prioritises. We have seen on two separate occasions—last July, when the race riots occurred in Britain, and then at the beginning of this year, when he picked out people such as Tommy Robinson to elevate and try to exhume the child grooming scandal—that Musk has an actively hostile attitude towards Britain, which does reflect a lot of the online right. This sees European democracies, Britain included, with Germany perhaps at the top of the list, in essence as Democrats abroad, as virtue signallers, weak promoters of multiculturalism and feckless democracies that are ripe for the kind of disruption that Musk helped bring about with Trump’s election last November. I believe this is a very active and hostile attitude that should not be discounted.
Q38 Lord Bruce of Bennachie: First of all, can I declare an interest? I chair a charity, Water Unite, which has interests in the US, and I am an adviser to DAI UK, but the parent company is a major contractor to USAID and others, and obviously is very much affected by decisions that have been taken.
Just picking up on that, it has been suggested to us that it is a divergence of not just culture but values. I suppose there are two parts to the question. Is there an emerging difference between European values and American values that has fundamental significance? Where does the UK sit on that spectrum? One gets the impression that Donald Trump is trying to drive a wedge between the UK and the EU or the rest of Europe.
Is that the case and how does Britain steer its way through that? Is it still possible to have practical relationships with the US in this climate, on trade, defence and intelligence, or are we going to get caught in the crossfire? Perhaps Edward can go first.
Edward Luce: This is a very good question. To go through each of those areas, starting with trade, I do not think a comprehensive old‑fashioned‑style trade deal is realistic for the United States with any partner, including even the UK nowadays. The last bilateral trade deal that America did was with Colombia in 2011. The last sort of trade action was the renegotiation of NAFTA in Trump’s first term. The USMCA—“Usmaca”, as people here call it—is a deal, although negotiated by Trump, that Trump is now trashing, as you are seeing with Canada and Mexico.
A US‑UK trade deal would be very much limited to regulatory issues such as data, AI and agricultural access, which would produce complexities for Britain. For example, if Britain accepted US agricultural standards, that would then complicate Britain’s ability to do a deal with its European partners, and the veterinary standards would of course be very different between Europe and the US. Europe being a bigger trading partner, that would be problematic.
AI is what the people around Trump, Musk included, are most keen on. That would produce immense controversies in Britain, because in essence what they would seek in an FTA with Britain is a scrapping of digital privacy standards and an opening up of, for example, the NHS’s enormous database to AI exploitation and usage. Those would be the contours of a trade deal.
Defence is a bigger question, because there are those making the case, and I would agree with them, that Britain and other European countries should not just step up their defence spending a lot more than they are doing but increase their self‑reliance in terms of sourcing of defence equipment. An increasing dependence on the US, on the assumption that Trump has not gone rogue and still does believe in NATO and in the Alliance, is a pretty huge bet on which to make multiyear, multibillion defence contracts. I would urge Britain to look to diversify its defence sources while stepping up its defence investment.
I cannot remember the third. You mentioned trade, defence and one other.
Lord Bruce of Bennachie: It was intelligence sharing.
Edward Luce: Intelligence sharing is even more thorny. As you know, Tulsi Gabbard is director of national intelligence. Until she was nominated for this position, she did not get high‑level security clearance. She was denied that because of her manifold contacts over the years with, among others, Assad’s regime in Syria and, of course, the Russian Government itself, whose talking points on the Ukraine war she has continued to reiterate, having been confirmed into this job.
I know personally that many people in the British intelligence community are wary and worried. They place extreme value, as they should, on the Five Eyes relationship, and particularly that between the US and the UK, but, watching how countries such as Canada are treated, they are becoming very wary. That, I suggest, is a subject that requires further inquiry.
Gerard Baker: On the trade issue, I am a little more optimistic than Edward about trade for the UK. I do not think there is any question at all as to whether Donald Trump is, intentionally or otherwise—probably intentionally—driving a wedge, or attempting to, between the UK and the EU. For sentimental reasons, as Edward said at the beginning, he has an attachment to the UK that is stronger.
On the economics of it, the UK is in the fortunate position, from a US perspective, at least according to US trade data, of actually running a trade deficit with the US. As I think you probably know, it is a weird thing that, under UK data, the UK estimates that it has a surplus with the United States, but, under US data, the US estimates that it has a surplus with the UK. I have advised a lot of people in a lot of these meetings. Clearly, the way to deal with this trade issue is just to fix your own accounting numbers.
So the UK is already in an advantageous position from Trump’s perspective there, because there is at least more of a balanced trade. I think Trump approaches trade with this fairly simplistic view that, if the US has a trade deficit with a country, it is somehow being cheated and that needs to be corrected. With the UK, that does not apply. So there are some grounds there. On the specifics of achieving a trade deal, Edward is right on all those details. It will be difficult. It is also true that trade deals have been notoriously hard to come by in the US because they require ratification, usually by Congress.
But we are in a slightly different situation now. Trump has such control over the Republican Party. We have never seen any President have such authority over his party before. We do not need to get too much into the detail here, but, as we heard yesterday, Trump is coming up with a plan to grade countries around the world according to how they are seen in terms of the openness of their trade and the level of their tariffs. There is this reciprocity announcement that he is going to come out with at the beginning of April. Those countries that are deemed to be generally fair traders, with relatively low tariffs and a relatively even balance of trade, or even a deficit with the US, will get favourable treatment. There is all sorts of talk about linking that to defence and other issues, too.
That will be a very interesting development to watch in the next month. There is this whole question about whether Trump is using trade to reorder not just international economic relationships but the international geopolitical order too, in that some countries will be let off tariffs depending on whether they are doing more in their own defence and that kind of stuff. Again, Edward was right about all those specific difficulties but there is an opening for the UK, for all kinds of reasons, to have even a minimal trade deal with the UK.
On defence, I do not disagree, but, again, Trump’s instincts remain to be quite closely aligned with the UK. Everything Edward said is right about Europeans seeking alternative sources for their defence procurement, but I think the US will still seek a close relationship. I am sure the same will apply for intelligence, too. I have spoken to US officials who value the intelligence relationship that the UK has with the United States more highly than any other relationship that they have in the world. I will be surprised if Trump lets that go.
Finally, on this broader question with Trump, we should not get completely carried away with the idea that Trump is the future. Who knows what is going to happen in the next four years and, indeed, beyond that? Trump has very particular views about some of these issues, whether it is Russia/Ukraine, or defence relationships more generally, that are not shared by the vast majority of the Republican Party. They are not even close. If there were a free vote tomorrow in the Senate, out of the 53 Republican senators, at least 45 would vote the other way. By “free vote”, I mean an anonymous vote. They do not want to be out there and seen to be defying Donald Trump.
So we should not necessarily assume that the direction that Trump is pushing policy in right now is a permanent shift in US policy, whether or not a Republican wins in 2028, and whether or not, frankly, the Republicans lose seats, as they probably will do, in the House and the Senate next year. We are conditioning too much right now on the long‑term relationship, on the assumption that this is a fundamental shift and breach. While I do not doubt at all that Trump represents something radically different from what we have seen, I would not necessarily go so far as to say that the UK should think about its relationship with the United States as permanently altered as a result of what we have seen in the last six weeks or so.
Q39 Baroness Coussins: Sticking with thinking about the potential for collaboration, or the opposite, between the US and the UK on the geopolitical front, what would you say are the US expectations of the UK in relation to Trump’s plans for Canada and Greenland? In addition to that, do those plans have any wider traction across the Republican Party or are they simply Trump’s fantasies? Edward Luce, would you like to start, please?
Edward Luce: Going with Gerry’s secret ballot experiment, I do not think most Republicans would agree that the annexation of Canada or an Anschluss with Canada is a good idea. It is an extraordinary target to choose literally the friendliest, gentlest neighbour anybody could possibly hope to have. It probably does spend too little on defence and rely too much on the United States, but that is a natural accident of size and geography, and there is really no better bilateral relationship in the world. It is a bizarre choice of target politically.
It is worth noting in that context that the leader who has done best in terms of their domestic approval and in terms of gaining Trump’s respect in the last eight weeks is Mexico’s Claudia Sheinbaum. She has been quite flinty in, correctly rather than rudely, but very firmly, standing up for Mexico’s interests, and Trump has exhibited no designs on Mexico.
Would the UK be expected to play a role in Trump’s planned acquisition, expropriation, whatever we call it, of Greenland? I do not think that one has been thought through. This is something that has got into Trump’s head. The acquisition of Greenland is not an issue that has been raised independently by other Republican figures, except one or two around Trump.
There is not a sophisticated game plan other than Trump’s idea of the art of the deal, which is to browbeat Denmark into selling Greenland. As you know, there was an election last week in Greenland and parties that reject the idea of becoming part of the United States overwhelmingly won. Opinion polls there show that the Greenlanders are not yet ready to be acquired or bribed.
I would just add what is probably a personal rather than an analytical comment. As the Scheinbaum/Mexico example shows, Trump responds to robustness and senses weakness. If Denmark’s NATO partners and European neighbours stand with it and say, “This is an outrage. This is a traducing of all rules of partnership and international law”, that will cause Trump to back up. He does respect strength.
Gerard Baker: The most insightful comment anybody literally has ever made about Donald Trump was a reporter writing about him in his 2016 campaign, who said, “The media and his opponents take Trump literally but not seriously. His supporters take him seriously but not literally”. That is very important. Anything that Donald Trump ever says always has to be understood in those terms. Donald Trump is the most extraordinary and confounding politician any of us has ever seen in our lifetimes. He has these extraordinarily reliable political instincts, but he does say an awful lot of stuff that, either wilfully or not, is not true.
On this particular issue of Canada, I have spoken to people in the Administration and to Canadians, and they are cautious, saying, “Let’s not assume anything here. We never know with Donald Trump”. I do not think Donald Trump has any plan or intention of sending the 82nd Airborne Division into Ottawa any time in the next few months.
This again is another classic Trump trope. Edward hinted at this. Trump is seeking a much deeper economic relationship with Canada. There is a slightly delicious irony here for the new Prime Minister of Canada, in that Trump would like something akin to a single market between the United States and Canada, which he thinks would benefit the United States, possibly even with Canada joining the dollar, which would also benefit the United States, because over the long term, the US dollar has risen over the last 10 years against the Canadian dollar.
So I think he would like a really deep economic relationship between the United States and Canada. This is classic art of the deal behaviour. If he were to say, “I’d like a really deep economic deal between the United States and Canada, perhaps even along the lines of the single market of the European Union”, he probably thinks he would end up with just a marginally altered version of the USMCA that he has currently. If he goes out on a limb and says, “Canada shouldn’t really be its own independent country. It should be the 51st state” and all that, he will achieve something else.
I do not know. It is pretty obvious that this extraordinary language has really riled Canadians and has altered Canadian politics, as we can see, with support for the Liberal Party now much stronger than it was two months ago. I do not know how that works. It is the same with Greenland. As Edward said, whether it is to put pressure on the Danes to sell Greenland or whatever, Trump believes that talking in these maximalist terms is the way to deliver the best possible deal for the United States and for him. I suspect that is the game here.
Q40 Lord Darroch of Kew: I should start by declaring two interests in relation to this inquiry. I am a member of the global board of an international consultancy called Panterra, which has an operation and offices in the US. I am an adviser to an American AI company called Dataminr, which supplies the US Administration. I wanted to go back into the economic sphere now. The other aspect that is in the news a lot is tariffs.
I might start with Gerard, because the Wall Street Journal has absolutely rightly been very critical of the Administration’s policy on tariffs, prompting the President to say in a tweet: “The globalist Wall Street Journal has no idea what they are doing or saying. They are owned by the polluted thinking of the European Union”. Congratulations on that badge of honour. Of course, you are absolutely right on tariffs policy.
I have a two‑part question. First of all, tariffs are not going down well with the US business community. They are causing the stock market to drop rather alarmingly, and that is an economic indicator that Trump watches very closely. I am sure there are lots of phone calls from senior businessmen in America to the White House saying, “This is not a good idea”. What do you see as the likely future direction of this policy? Is Trump, because he can turn on a sixpence if he wants to, going to abandon all this stuff? Do you think he will stick with it? How is he going to play it? Can we look forward to another three years, 10 months of action on tariffs, or do you think this is going to gradually fade away?
Then, more specifically, there has been talk or expectation that the UK might get some sort of exemption on this. That has not happened so far. The 25% tariffs on steel and aluminium apply to the UK like everyone else. I just wonder whether there would be some conditionality to this in the President’s mind—in other words, we might get an exemption if we do something for him—in which case it probably is not going to happen for us and we are probably going to be hit the same way as everyone else. What are the chances, do you think, of a British let‑off in some way? Let us start with Gerard.
Gerard Baker: Thank you, Lord Darroch. Yes, that was one of Trump’s particularly choice observations about the media. I particularly enjoyed it. As you know, the Wall Street Journal is owned by Rupert Murdoch. I am absolutely certain it is the first time that anyone in the world has said that Rupert Murdoch was the product of the polluted thinking of the European Union. That was a first for us there too.
Again, you are right, Lord Darroch. He does turn on a sixpence and he does change his view. One thing he has been absolutely consistent on, even before he went into politics, is this sense he has, as I mentioned earlier, that the trading system operates in a way that disadvantages the United States, for the most part. He believes that any existence of a trade deficit between the United States and any other country is a symptom of some fundamental economic injustice on the part of the other country. The other country is in essence cheating the United States when that happens.
Sometimes that is true. We certainly argue that that would be true in many respects with China, in terms of domestic subsidies, tariffs and of a regulatory framework that heavily privileges domestic output. That is true in some countries; it is obviously less true in other countries, but that is his overall view. The US globally runs a very significant trade deficit. There are big trade deficits with Canada, Mexico and China, most notably, and the EU. All those countries and economic partners are deemed to be somehow cheating the United States. The way to deal with that, if they do not change their rules to curtail the cheating, is to hit them with tariffs, because tariffs are supposedly a way of redressing the imbalance.
I think he genuinely believes that and genuinely intends to pursue it. That is behind what he has done so far with all the tariffs that we have seen. As I say, perhaps not everybody expected them to hit Canada and Mexico so hard, but that is the thinking anyway, at least, behind it.
As I said earlier, there is this question of reciprocity. There is definitely a strong effort by people in the Administration, such as Scott Bessent, the Treasury Secretary, and the White House economics team, to make this the focus. In other words, to take Trump’s point about the injustice of the trading system, on balance it is true—WTO numbers support this—that other countries have slightly higher tariffs on average than the United States does among its trading partners. He will try to use the threat of tariffs to redress that balance.
With the rollout of this reciprocity scheme, we reported yesterday at the Wall Street Journal that it would have these three categories of countries: ones that basically were playing by the rules, ones that were cheating a little bit, and ones that were outright scofflaws. If that is going to be the framework, there will at least be some rationale to it.
One of the problems we see at the moment with Trump, especially when he imposes tariffs on Canada or Mexico, is that one day he says it is about trade; another day he says it is about fentanyl; then he says it is about currency manipulation. It is hard to know, but if they are going to establish this reciprocity‑based approach from next month, as we are promised, we will at least get a sense. We will be able to answer your question at least in part.
Coming back to the UK, that reciprocity framework will probably be helpful for the UK. On the whole, I do not know. The US tariff regimen consists of millions and millions of individual tariffs on products. I do not know, but the general impression from the numbers I have seen is that the UK probably will be seen to be a reasonably open trading partner. As I said earlier, because of its—however you want to measure it—slight trade deficit or slight trade surplus with the US, it will probably benefit from that. If that becomes the framework by which Trump’s trade policy will be implemented, at least we have some clarity and some rationale. No one can guarantee that with Trump.
One other very quick thing I should say is that everything with Trump is impulsive and instinctual in terms of his own immediate policy, but there is a lot of thinking going on behind the scenes. On international economics, there is some very interesting thinking going on behind the scenes in the Administration about a complete reordering of the global financial order, if you like. There is a belief, which is consonant with Trump’s views on tariffs, that the US, far from being the beneficiary of the dollar as the global reserve currency, has been disadvantaged by that, certainly in the post‑Cold War period, because it artificially raises the value of the dollar.
As we know, something like 70% of trade is still in dollars. Something like 60% of central bank reserves are still in dollars. There is a huge demand for dollars, which artificially raises the value of the dollar, which disadvantages domestic US production, because of course that makes imports cheaper and exports more expensive. This is a serious thought by the new White House economic adviser, Miran, and some of the other people around Trump, who want to reorder the system so that the dollar ceases to have this position. In effect, they want to undermine the dollar’s position as the global reserve currency in a way that would weaken the dollar, improve the trading balance for the United States and place fewer burdens on the US. Of course, it would have many disadvantages; the US might have difficulty borrowing as easily as it does to finance its enormous fiscal deficit.
Part of the thinking here, and the reason I mention that, is that tariffs can be, again, a tool through which to achieve that. This reciprocity‑based plan that comes out next month can be used as such a tool. There is talk about a new Plaza accord, which was a deal in 1985 to depress the value of the dollar. There is talk about something along those lines whereby other countries would agree to reduce the value of the dollar and reduce the holdings of dollars in their reserves, and in the process might be let off some of these tariff arrangements.
It is important to look for all of that. With Trump, I do not think that his thinking has been too deep on that subject, but there is quite deep thinking going on about whether this might provide an opportunity to completely remake the international financial system in a way to benefit domestic US production and to reduce the scale of the US trade deficit.
Edward Luce: I will simply say that on tariffs, for sure, there is the art of the deal. One day tariffs are on, the next day they are off, and then they are suspended. They are like Schrödinger’s tariffs. Are they actually there or not?
For the UK, I think because the UK did not retaliate when the steel and aluminium ones were imposed a few days ago, and the EU did, the EU got this 200% tariff threat from Trump the following day and the UK got nothing. I am not sure that simply to take it is a sustainable strategy from the UK, even though economists would recommend that, since tariffs are harmful to both sides and, therefore, it is irrational economically for Britain to retaliate. Politics will make that harder and harder, but I have no insights into where Trump plans to go next with this.
On the new mercantilist thinking that Gerry was just outlining, you should also take into account the plans for the US Federal Reserve to be required to take a strategic bitcoin cryptocurrency on to its balance sheet. That will be an interesting and uncharted addition to the Fed’s approach to managing its assets, and will have a bearing on the dollar’s role as an international reserve currency. It will put a question mark over it.
Q41 Lord Grocott: One of our earlier witnesses described the special relationship as being an abusive relationship. I am guessing now, but what I think was meant was that it was a big‑state/small‑state relationship, where the small state had a tendency to be the loser and to do things it did not particularly want to do but felt it had to, in order to maintain the relationship. That is my best definition of it. I just wonder whether that resonates with you at all and, if not, why not? Edward, would you like to start with that?
Edward Luce: If that phrase was meant to apply over a period of time, I would not necessarily characterise it as that. The US‑French and US‑German relationships survived their refusal to participate in the Iraq war. I do not think Britain was obliged to do so. That was Britain’s choice and it clearly was not a very good one.
The potential for this to become abusive is very real and very live under Donald Trump, and, I should emphasise, under the Trump-Vance Administration. I do not know what Britain would do if Trump woke up one morning and decided that really the Bahamas, Bermuda or the Cayman Islands ought to be under American sovereignty, and how we would respond to that, but nothing that could arise out of this very unpredictable, capricious presidency would surprise me.
The idea that Britain is a bridge between Europe and the United States is probably a forlorn one. You should be holding three or four hearings on UK-German relations, for example. Brexit seems like a quaint decision from the past in the context of what is happening today with Russia and Ukraine.
On accounting not just for Britain’s defence future—I know there is a review going on—but for its larger geopolitical stakes in the world, that conversation has yet to really begin. That is understandable, when we are only eight weeks into this Administration, but the fundamental assumptions on which we have operated are being knocked down, shaken or challenged one by one. This is one of those hinge moments in history, and I do not think anybody, including Britain, has yet really come to grips with what that means.
Gerard Baker: I disagree again. First of all, the UK gets enormous benefits from its relationship with the United States. I am not going to say who gains more out of that relationship, but I think to characterise it as abusive is extreme language. The economic relationship alone is incredibly valuable to the UK. We know that trade flows between the US and the UK are way out of proportion to the size of the UK economy. Foreign direct investment both ways is enormously beneficial. American companies continue to see the UK—post Brexit, by the way—as a valuable opportunity for them to continue to invest. Go and walk around the City of London. The number of US financial institutions that operate in the UK is still extraordinarily significant.
The cultural relationship is still important too. I have five daughters who have been through US universities. They all love to go and spend time in the United Kingdom more than any other country. That relationship is just so deeply embedded in the two countries, much more than, I think, any other two countries that are not geographically close. I do not think there is any other relationship like it in the world. Both countries benefit enormously from that relationship.
On the specifics of defence and intelligence, as I said earlier, there is no question but that the US feels it benefits enormously from the Five Eyes and from the relationship with the UK. American military leaders will tell you that they feel they benefit hugely, even despite the difference in scale, from their relations and the exchange of personnel, ideas and all other manner of things with the UK.
Trump is an extraordinary figure who says some frankly outrageous things at times, but we should be careful not to let that sometimes weird rhetoric obscure the fact that the relationship between Britain and the United States remains a very strong one. Both countries benefit enormously from that relationship and, if anything, especially in the economic field, they may come to benefit even more.
The Chair: Can I welcome Anton La Guardia to our meeting? If you are happy to, just join in from now in answering the questions. Thank you so much.
Q42 Lord Houghton of Richmond: I need to declare two interests. First, I am the European and Middle Eastern chairman of a company called Draken, which is a Blackstone company that does combat air training in Europe, the Middle East and America. Secondly, I am a shareholder and a strategic adviser to an open-source intelligence company called Tadaweb that also trades in the US.
Can you just help us a bit? We got on to this slightly in the defence‑related question, but so much of the evidence that is coming before the committee is fascinated by the here and now of Trump that we want to make certain, as we proceed, that we do not miss some greater strategic divergences that will continue beyond Trump, which we need to be aware of.
You touched on the defence one, particularly Edward in his last answer. We are going to have to start to be more European, sovereign and, dare I say, nationally independent of much of our connectivity with the United States. Presumably, you would believe that the AUKUS deal and the nuclear dependency we have on America would remain intact through that, and you are focusing more on the whole breadth of the conventional inventory and the need to build that up in deterrent terms in Europe.
Could you comment on the defence portfolio in a little more depth, but also highlight any other strategic divergences that we need to keep our eye on, so we make certain that we have a balanced report and not a Trump‑infected report, as it were?
Gerard Baker: It is a very fair point. I have already said that we need to be a little bit careful not to assume that Trump, as much as he represents a break with the past, is an irrevocable break and is the future. At the same time, it is also true that part of the reason Trump won and is President is that the United States is a different country with different priorities from the ones that it had 20 or 30 years ago.
Part of the rejection of more traditional political figures of both parties—this is only a small part of the story, but not an insignificant one—is the sense that the United States has spent way too much time pursuing strategic objectives over the last 20 or 30 years that were in the interests not of the American people but of some larger global liberal order. Take the wars in Afghanistan and Iraq, ultimately unsuccessful interventions, as well as elsewhere in the Middle East.
Lord Houghton, you raise a good point. Some of this is Trump; some of the extreme stuff is Trump, but these are underlying changes in the way Americans see the world and, indeed, after all, in the way the world is. The largely failed US overseas adventures in the last 20 years and the rise of the great strategic challenge of China have fundamentally changed the way Americans think about the world, even including some Democrats. The Biden Administration will be whispering the last enchantments of the Cold War world to Americans, because, whatever happens beyond the next four years, that shift is really embedded now in the American strategic view.
There are some in the Administration or about to become part of the Administration—Elbridge Colby, for example, whose nomination is up for a senior position at the Pentagon, has argued extensively on this—who say, “This means that, although we share values with the Europeans, we are still sympathetic with the Europeans and we still see Russia as an adversary, we really have to fundamentally shift our entire strategic posture so that we are ready to deal with the challenge from China”. That is a pretty widely shared view in the US, it is fair to say.
There is an either/or there, if you like. It is a zero-sum game in which the focus on China, the Asia-Pacific and the Indo-Pacific means that there just cannot be the commitment given to Europe that there was. That is argued and there are people who say we can do both, but, by and large, it is pretty widely accepted that the strategic challenges the United States faces in the middle of the 21st century are pretty radically different from the ones of the Cold War or even the immediate post-Cold War period.
That will survive Trump, whatever happens. I have no doubt about that. Europeans seem to have been getting the message in the last couple of months, even more than they did in the first Trump Administration, when Trump supposedly threatened to withdraw from NATO. They are seeing that reality starkly brought home to them. I hear the phrase when I travel around Europe now that Trump is making Europe great again. They are finally realising that they have to do something about their relative and absolute weakness in their defence capabilities, and that will change.
I am not trying to offer a normative judgment on this, but maybe that is the right thing. Maybe preparing for a world in which the United States does not see western Europe as a vital theatre for its own strategic interests is a very wise thing to do, whether or not Donald Trump is President. There has been a fundamental recognition of a changed reality across the political spectrum in the US.
Edward Luce: Trump hates NATO. He genuinely despises it and always has. There is no real surprise there, and he means what he says. Britain should strategically plan on the basis that this is not an aberration. We talked of Trump being an aberration, or some people did, in his first term. Biden, of course, said, “America is back”. Well, Trump was re‑elected and he said, “America is back”. It is conceivable that a Democrat will be elected in 2028 and, for the third consecutive time, say, “America is back”, but which America are we talking about?
The continuity between Trump and any Democrat or Republican who comes after him is, depending on who you talk to, a soft to hard repudiation of the post-war world that America built. That means international alliances are treated with great scepticism. Partners are treated more as people you subsidise, through both trade and defence. The real challenge is, of course, China, and not anywhere else in the world. That is the overriding bilateral challenge that America faces.
The British and all of America’s partners have to plan for a world in which America is not there for them anymore. In Britain’s case, that means recognising that it is a European power. I sensed in some of Gerry’s answers just now that he saw Europe as separate, and Britain and America as being a different defence strategic entity. I do not think that should be assumed. Britain should not, as a matter of choice, break from America. That would be an act of hara-kiri. But it should plan for the probability that Trump is very serious on this and that this is going to happen. It would be reckless not to make that assumption.
Too many times, people sane‑wash Trump and say, “No, no, he doesn’t really mean what he says. He’s not actually going to do that. He’ll be restrained by the adults around him”. He has amplifiers around him this time. He had people who muffled him in the first term. This time he has amplifiers and true believers, and we must act on the assumption that what he says is what he means. That has very radical implications for our future.
One other point is about the nuclear deterrent, Trident. This is not an independent nuclear deterrent in the way that the French nuclear deterrent is. I have not seen much debate about that. There should be debate about what that actually means.
Lord Houghton of Richmond: The point that I really want answering is about the areas of strategic divergence that outlive Trump, if you can perhaps focus on that, please, Anton.
Anton La Guardia: Thank you. I apologise for being late for this. Ed makes an important point that we are all Gaullists now, and need to be much more independent and autonomous than we ever thought necessary. That has important consequences because trust is now fragile, let us say. We have built defence systems that plug and play with the Americans and are highly dependent on them in all sorts of ways beyond Trident.
Learning to undo all of that will be both painful and very difficult, not least because of ITAR[1] restrictions and the ability to restrict items. The cut‑off of aid and weapons to Ukraine was a sobering experience in realising how dependent people are on the United States. Therefore, having a more sovereign system has all sorts of consequences about what you can and cannot share, not just with the Americans, but even with European partners. The thinking needed for that is going to be extremely profound.
Are there areas of divergence? Americans, Brits and Europeans can diverge on all sorts of matters. There is the question of the Indo-Pacific. There are at least three schools of thought around Donald Trump, to the extent that you can create a taxonomy. It is never entirely clear which faction has the upper hand and each faction sees the world in a different way. There is still a remnant of the old Reaganite school, which in essence British policy attempts to cling to. I am sorry if I am going over ground that my colleagues have covered.
There is a focus on the Indo-Pacific, as Ed mentioned, which would be extremely important, but parts of the United States are unclear as to how far America’s interests in the Indo-Pacific really run. Does it defend Taiwan or is that a war too far? Does the line run not along the first island chain but along the second island chain, or indeed along the third island chain, which goes through Hawaii? All these things are undecided. We have seen Trump adopt a more “sphere of interest” outlook, given his emphasis on Canada, Greenland and Panama, but it still has very fuzzy borders, and we do not know in the Asian context where those borders run. Is this a western hemisphere-only outlook or a western hemisphere plus the Indo-Pacific outlook?
The last thing to say is that Donald Trump himself does not really subscribe to any of these schools. You see him striking the Houthis in the Red Sea at the moment. This implies that they care about the maritime sea routes and their safety, which is not an entirely isolationist point of view to take. I am sure this is debated. They are firing off a lot of Tomahawk missiles in Yemen, weapons that they would need in an Indo‑Pacific contingency.
So a lot of what is happening is not entirely consistent with any one particular point of view. Therefore, to try to answer your question, it is difficult to say what the areas of divergence are, because we are not quite sure that there is a crystallised strategic view in the United States. A lot is in flux, a lot of the pieces are still in movement, and they keep landing in places that are often unexpected, so expect surprises.
Q43 Baroness Fraser of Craigmaddie: My question is what the promising areas are for US-UK collaboration. We have touched on defence and on tariffs, and briefly mentioned intelligence. We referred to cultural and perhaps academic research ties. Have we missed anything? What are the main challenges? As a supplementary to that, we have had very opposing views as to whether Trump is an aberration or whether we need to look strategically beyond Trump. Where is our scaffolding to navigate this? Where, if any, are the roles of the multinational agencies, our international alliances, and all of that?
Gerard Baker: I take Edward’s earlier point that the thought that the UK could be a bridge between the United States and Europe is probably overdone and maybe not right. I remember, when Sir Keir Starmer became Prime Minister—this was one of the first things he said after he entered Downing Street—he talked about foreign policy and about how we do not have to choose between our relationship with the United States and our relationship with Europe. I remember thinking at the time, “Good luck with that”, but, funnily enough, events have proved him right.
That is the reality. The UK is in a uniquely advantageous position. For all the reasons I have given, the relationship with the United States remains very strong, although we know it is going to take a lot of buffeting with Donald Trump in the White House. I have talked about the economic relationship and the cultural relationship.
We have not talked a lot about technology. The UK is seen by American companies as the second most important country after China in the development of artificial intelligence, with the investment that is going on here from American companies and others. All the opportunities that exist there are really rich and, again, they are quite unique to the UK. They do not apply to other European countries. There is this economic, technological, cultural alignment there, which is incredibly advantageous for the UK.
On the specifics of defence and foreign policy, that is going to be more neuralgic because the UK does want to retain good relationships with Europe. For the reasons Edward has given—Trump does not like NATO or the EU—that is going to be difficult over the next few years. Maybe there will be some difficult decisions to be made about the role of the so-called independent nuclear deterrent for the UK and about further defence collaboration with Europe that is somehow outside NATO. We should never forget that one of the ways in which Americans have always liked to have it both ways is that they want Europeans to do more in their own defence, but not too much, thank you very much. That was one of the defining features of the NATO relationship for 50 years. “Yes, of course you should do more burden sharing, but we want to be able to tell you what you should do. We don’t like the idea of an independent European defence pillar”. That is going to become a more difficult issue for the UK to deal with.
I repeat that the UK has a privileged economic and historic political relationship with the US. Again, allowing for all of Trump’s extraordinary unpredictability and whimsical approach, he has a fundamentally fairly positive view about the relationship with the UK. Both during the Trump Administration and, to answer your larger question, Baroness, beyond that, the UK necessarily, in economic terms, will maintain a very good, strong economic relationship with the United States, while being able also to pursue, as it sees fit, its continuing opportunities within the EU. I do not want to sound too glib or Pollyanna-ish about it, but, to come back to the point I made at the beginning, the Prime Minister is right. I do not think the UK has to choose.
Anton La Guardia: Gerry is right, in that Britain is in an advantageous position, but let us be sober about this. You have to sit in Washington to get a sense of how far the rest of the world really is. It might be better to say that Britain is less disadvantaged than others in the way this Administration in particular views the world.
It is going to be much more of a pick and choose type of relationship, rather than an attachment to allies and the old order as it was. What the Americans want, when they want friends and allies, are capable ones. Having capability will be very important. There was a fair degree of scorn here as news emerged of the shrinking of British Armed Forces. That is one thing.
The ability to act as a bridge is there. The relationship is there. Donald Trump, in particular, likes bilateral relationships. He tends to dislike institutions, which he thinks constrain American power, are complex and difficult to deal with, and are all somehow symbols of internationalism and globalism, which he does not like. It is going to be a very bilateral dealing with the world. The thing about Trump is that he may be sui generis, but the point is that he has happened twice and Trumpists could happen again in future. For the foreseeable future, the relationship will have to manage the unpredictability of American politics and then, often, the unpredictability of characters like Donald Trump or his successors.
There will be Administrations that want a more joined-up alliance system, particularly when dealing with China. The near parity of GDP between China and America is such that America will need its allies. If they are an Administration that think about Asia principally, that places great importance on Japan and Australia, and to some extent the Philippines. Under Biden, there was a desire for the Europeans to do more in Asia. Under Trump, there is a desire for the Europeans to do more in Europe, so that the Americans themselves can disengage and go and pursue interests elsewhere.
On the multilateral front, you have seen this extraordinary vote at the United Nations in which the US voted with Russia. Expect to see more such strange behaviour. That raises an important question as to whether it is ever conceivable that Britain and France, which are veto‑wielding members on sufferance, will ever feel the need to cast the veto for issues that they think are vital for themselves in a European crisis. In this Administration, multilateral institutions will be generally less important, but relied upon opportunistically, as we saw the UN Security Council used to signal to Russia and others that America has changed.
Baroness Fraser of Craigmaddie: Yes, that extraordinary UN vote. I am glad we have come to that.
Edward Luce: Indeed, and it will not be the last. Of course, Trump again has pulled out of the World Health Organization and pulled out of climate commitments. These are clear divergences from what this British Government would like to see. The way I would interpret your question is about what Britain can do to express its own foreign policy from its own interests. Supporting multilateralism is going to come up now that we have an Administration that is seeking to move away from it, if not dismantle it.
There are similar questions with the cuts that Trump is making to America’s overseas soft power. In the last few days alone, Voice of America has been completely shut down. Radio Free Europe/Radio Liberty has been denuded and 80% or 90% of staff laid off, with a view to shutting it down. That is not an area of potential collaboration between the US and the UK, but it is an area where the UK can step up. The BBC World Service is the only other real global broadcaster. It has had budget constraints in recent years. There is an enormous demand for this kind of service around the world. Now that America is vacating it, at least for the time being, that is an opportunity for Britain to provide that service.
I would say the same about the shutting down of USAID. Again, we cannot expect that to come back. There might be minor ad hoc programmes that will survive this shuttering of USAID, but there will be many, many, many, many gaps left. I have seen some really quite alarming predictions about the number of people, for example, who depend on HIV, malaria and TB treatments from the United States, or emergency humanitarian assistance in war zones. I have seen some really alarming numbers about how many people will die because of these actions. This is something that Britain should be stepping in to do. I was a little bit disappointed to see that the recent very nominal British defence budget increase came at the expense of the development budget. That is not strategic thinking.
What I would say is this. Keep relations strong. Be open-minded on AI. Gerry is correct on technology. There is an enormous amount that will happen anyway, regardless of government‑to‑government relations. Be as co-operative as possible with the United States, because it is a deep and the most important relationship, but also bear in mind the other things that are changing very rapidly that undercut Britain’s national interests and, indeed, global stability. Ask what Britain can do to contribute to that.
The Chair: Can I just interject and say that we have run over rather considerably? We have one further question. I would be very grateful for snappy questions and answers, please.
Q44 Lord Alderdice: We have been hearing your thoughts about cuts. I have two related questions on that. First of all, how popular or unpopular are the federal government cuts that have been spearheaded by DOGE? Secondly, one witness has suggested to us that cuts directed at the State Department, the network of consulates and so on might reduce the US’s ability, but would that give an opening for the UK to assist in the provision of global intelligence to the United States?
The two questions are related, because they are both about cuts. Perhaps we could start with you, Anton.
Anton La Guardia: I did not hear the first half of your question, I am afraid. I heard the second part about cuts to the consular service and the State Department.
Lord Alderdice: The first part was how popular or unpopular the federal government cuts spearheaded by DOGE are.
Anton La Guardia: You are starting to see a backlash against that, including in Republican areas, as the consequences become apparent. You have a Republican Party that is basically supine, and a congressional caucus that is not responding and is scared of being primaried for as long as Donald Trump has a grip on the base. You are not getting the usual feedback mechanism in American politics. Ed can talk about this at greater length. The base likes the style of taking the chainsaw to the federal Government, but it may not like the consequences once they start to filter through. There is also a lot of questioning of the very erratic trade policy that is being pursued.
As for cuts to State Department and the consular network, in general in American politics, stuff to do with the world is harder to sustain because it does not directly affect standards of living, which is why USAID was an early target and why even Marco Rubio, who was a believer in USAID and using soft power, has himself embraced the idea of cutting 83% of USAID programmes. Similarly, I think he will bow to cuts to the consular and diplomatic service.
It is worth noting that, when the Chinese had a diplomatic success in the Solomon Islands, there was a huge reaction from the last Administration, opening up consulates and embassies across the South Pacific, fearing that the Chinese were penetrating what had been considered to be an American lake. There is an innate tension in all this, which is that a lot of countries that now feel able to balance between America and China, or perhaps America and Russia, will feel a greater sense of autonomy and ability to take benefits from the other side, and the Americans will want to respond.
The damage of these cuts will become apparent in time, and some of them may be reversed.
Edward Luce: The consular offices that Rubio has announced are closing are mostly in Europe. He has announced six or seven, including in Florence and Hamburg. Certainly in their imaginations, the British know more about Florence than the Florentines. Maybe we can help America on intelligence in those cities.
If those cuts start extending to the global South, as I expect they will, outside of the immediate Chinese neighbourhood, yes, that is another case to be made for Britain to try to fill some of the gaps, to the extent that our resources permit us, in understanding what is going on in the rest of the world. There is not that much appetite to listen from this Administration. I cannot overstate that enough.
DOGE cuts, in theory, are popular. The idea that the federal Government—which can be very, very unresponsive, bloody-minded and high-handed, is hard to reach and get a response from, and has outdated 20th-century IT systems—is ripe for streamlining and overhaul, in theory, is popular. In practice, Elon Musk is really not popular in the way he is chainsawing through agencies, some of which have a bearing on people’s safety and day‑to‑day lives, such as the Food and Drug Administration or the Federal Aviation Administration, and the national parks. In theory, they are popular; in practice, they are unpopular.
As a partner, friend and ally of the United States, we should be concerned about the cutting back of federal capacity in certain areas. This applies to the intelligence community, by the way, and the very demoralised people at Langley at the CIA. Notwithstanding the fact that reform is very much merited, the way in which these cuts are being carried out is a cure worse than the disease.
Gerard Baker: The DOGE phenomenon is a classic political phenomenon. It is a sort of reverse NIMBY, or YIMBY. People generally speaking, in the abstract, hate Government and do not like government spending. They want to see it cut, and you see polls that give you that all the time, but when there are specific cuts that could affect them they are alarmed about that. The one that they are particularly concerned about has not happened yet and probably will not. That is social security, so the state pension, in effect. As Edward says, Musk himself is not popular and his behaviour is alarming a lot of people because they think these cuts are actually going to hurt them. Frankly, the process is not popular, having started out in principle as being popular.
On the cuts to US activities overseas, I take a slightly more sceptical view, especially on questions of intelligence. I have been in the United States for over 30 years and was with the Financial Times in the 1990s. I took great pleasure in hearing Newt Gingrich, who was then Speaker of the House of Representatives, at a hearing where he was very dismissive of the quality of a lot of the intelligence that came out—not specifically tasked intelligence, but the general intelligence that embassies and consulates were providing. In fact, he quite famously said at a hearing that he learned more from reading the Financial Times every day than from any number of daily briefings that he got from intelligence sources. I am not sure they have been hugely valuable.
My final point related to that is about soft power. Again, I am also a little sceptical about the role that propaganda agencies such as Voice of America or Radio Free Europe have had. America’s soft power in Europe resides much more in things such as iPhones, Instagram, Hollywood still, to some extent, or Netflix than in its ability to project a particular propaganda message. The importance of that for the United States, but also, again, for the United Kingdom, is a note I wanted to end on. The United Kingdom has enormous soft power, particularly in the United States, because of the cultural richness that the UK continues to produce. That is an enormous opportunity.
I will end with one final example. This is going to sound very trivial, but it really is not. When I first lived in the United States back in the 1990s, Americans would meet me, hear my accent and make some joke about the Queen or say, “Sorry about the revolution”, and that kind of stuff. Today, the first thing that almost everybody who meets me and hears my accent asks me is which Premier League team I support. Unfortunately for them, my team is not even in the Premier League, so the conversation ends very quickly, but the explosion of interest in that is a not insignificant factor. Is that making Americans think more positively about the United Kingdom? I do not know. Maybe it is. That cultural power is expanding dramatically. By the way, just as the National Football League plays games here in the UK, the Premier League should certainly consider playing games out in the United States to further increase its reach.
All of that soft power and cultural power that the UK has, whether it is sport, the arts, education, or to some extent the media, is incredibly powerful and, in these unquestionably vociferous times between the US and the UK, can only help to strengthen the relationship. To finish where we started, it can give ordinary Americans, particularly younger Americans—I am very conscious that behind me we have bunch of younger Americans—an even stronger sense of the importance of the relationship between the United States and the UK. The cultural opportunities are still very, very rich, and that is the great opportunity for the UK to continue to exercise influence beyond its weight.
The Chair: Can I thank you all very much for joining us and for the benefit of your wisdom? We will make sure that you receive a copy of the transcript of our discussion. Thank you very much indeed.
