Britain became a byword for self-inflicted economic harm and instability after Brexit and former Prime Minister Liz Truss’s calamitous tax cuts. But now, the country sees an opportunity to serve as a haven from the trade war that is rattling markets and the global economy.
Last week, President Trump limited the U.S. tariffs on Britain to the “base-line” rate of 10 percent, and his administration has been engaging in talks on a trade deal focused on technology. Though a deal has yet to materialize, Britain has avoided being a main target of Mr. Trump’s ire over trade relationships.
To be sure, some of that advantage was ceded late on Wednesday, when Mr. Trump said he would pause for 90 days the higher “reciprocal” tariffs on countries other than China, setting all other tariffs at a “universal” 10 percent. That leaves Britain subject to the same blanket tariffs as a host of countries that have not been as solicitous toward Washington.
Still, the European Union, Japan, Vietnam and dozens of others now have to negotiate to avoid higher tariffs from being reimposed, raising the stakes.
Yvette Cooper, Britain’s home secretary, said on Thursday that British officials were trying to strengthen trade relations with other countries, including the European Union.
Ms. Cooper said that Britain was focused on being a “stable place” for investors, highlighting that Universal Studios announced plans to build a massive theme park in the country, its first in Europe.
The backtracking by Mr. Trump on reciprocal tariffs “reinforces the strategy and the approach we are taking, which is to be pragmatic, to take this steady course, rather than to get buffeted around from day to day,” Ms. Cooper said.
“The U.K. has not been short of policies that damage the economy over the past decade,” Andrew Wishart, an economist at Berenberg, wrote in a recent research note. “But the U.S. administration’s assault on foreign trade will overshadow the U.K.’s missteps.”
Elections last summer handed Prime Minister Keir Starmer’s Labour Party a large majority in Parliament. The government has at times struggled to find its footing, but hasn’t suffered the unsteadiness that has recently hit other big countries in Europe, including Germany and France.
So far, the British government has not retaliated against the U.S. tariffs and is instead focused on supporting local companies. This week, Mr. Starmer eased rules on the car industry, which is facing a sector-specific 25 percent U.S. tariff, and the pharmaceutical sector, which appears next in line for U.S. levies. The government will “shelter British business from the storm,” Mr. Starmer said.
“We are an open market economy,” said Alastair King, the lord mayor of the City of London, who acts as an ambassador for financial services, in an interview late last month. “We have a great desire to do international business.” London could benefit from being a “neutral” location in international markets, he added.
Away from trade, Britain sees other opportunities, too. Scientists and researchers in the United States have shown increasing interest in European universities amid attacks on research funding at American institutions. After leaving the European Union five years ago, the British government struck a deal to regain access to the bloc’s flagship research and innovation funding program.
“Our place in the world as a trusted partner has the potential to go to another level,” Hugh Brady, the president of Imperial College London, said in a recent interview. The country is seen as “sensible, stable, ambitious,” he said, with citizens who also “appreciate the importance of science.”
Britain is still dealing with a variety of economic challenges, including increasing private investment, strengthening public services and reducing debt. It wouldn’t be immune to spillovers from a global trade war. British government bonds are also vulnerable when there is tumult in debt markets. Because of the country’s open economy and large financial sector, “global risks are particularly relevant to U.K. financial stability,” the Bank of England’s financial policy committee said on Wednesday.
Mr. Wishart of Berenberg said the government’s plan to improve its finances and other actions, like making it easier to build homes and infrastructure and a pledge to keep corporate taxes stable, would help “improve the U.K.’s reputation as a place to invest.”
