What does Trump 2.0 mean for UK tech ambitions?

President-elect Donald Trump’s ‘bromance’ with tech entrepreneur Elon Musk portrays Trump as a friend of the US technology sector, a key asset for enhanced competition with China. But Trump’s election also has implications for key allies like the UK and its ongoing efforts to become a technology superpower. Trump’s transactional approach to alliances highlights that the US is not only a partner but also a competitor when it comes to scaling up tech capabilities. The UK now faces added pressure to strengthen its sovereign capabilities and to compete for talent and capital. To succeed in becoming a tech superpower, the UK also needs to build alliances outside of a potentially unpredictable US.
New administration – continued competition with China
Trump’s second term will likely further fuel the competition for technological supremacy primarily fought between by the US and China. If his first administration is any indication, Trump will continue a hard stance on China, especially when it comes to the tech economy. The nomination of ‘top China hawk’ Marco Rubio as Secretary of State further confirms this strong anti-China stance. A reliance on tariffs as ‘emblematic of a broader change in US thinking on trade – and toward China’ will likely continue under the next administration.
While largely in agreement on a tough stance on China, the outgoing US administration has advanced several technology policies that stand in stark contrast to those that can be expected from a new Trump administration, especially when it comes to policies holding tech companies accountable for safety and security. Most notably, the 2023 US National Cyber Security Strategy envisages shifting responsibility for cyber security away from individuals and small businesses to ‘organizations that are most capable and best-positioned to reduce risks’ – read large tech companies, like Microsoft. The Biden administration is also supportive of AI safety policies – something the previous UK government under Rishi Sunak has made a top priority.
Expected shifts in US tech policy under Trump 2.0
The new Trump administration will likely change emphasis when it comes to tech regulation. It may be interested in regulating big tech where their power over content moderation is seen as highly problematic among freedom of speech absolutists.
But regulation of businesses is an unpopular tool for Republicans. This is especially the case where measures are seen as hindering US innovation or endangering US tech supremacy and, by extension, losing the tech race to Chinese competitors. From a UK perspective, particular attention must be paid to AI safety efforts. Trump has, for example, been a vocal critic of President Joe Biden’s executive order on AI safety. AI safety is a big topic for the UK, as seen at the 2023 AI Safety Summit and under former Prime Minister Sunak, and includes cooperation between the US and UK AI safety institutes. Although Trump may not abolish the US AI Safety Institute, it may face funding cuts, which could heavily impact still fresh partnerships.
The UK-US tech relationship
The framing of the tech landscape as an arena of competition between the US and China can overshadow key dynamics between allies like the UK and US. Despite close economic and intelligence ties, there is also economic competition between the US and the UK. Low taxes and cheap energy important to run increasingly large AI data centres, for example, could attract UK companies – particularly start-ups – and thereby reduce UK sovereign capabilities.
Another key factor in this competition for tech innovation is capital investment. The US frequently invests in, and acquires, UK-based tech companies. Competitive early UK advantages in areas like quantum technologies face restrictions in market size and acquiring UK funding. As a result, the UK faces ongoing challenges in scaling up tech companies. The US, with its vast venture capital funding, is therefore an essential partner. However, US investments into UK tech companies are a double-edged sword. While they boost growth for UK startups, a trend encouraged under the Conservative government, acquisitions can also lead to loss of sovereign capacity, as formerly UK-owned companies, often representing strategic technologies, become US assets. This was the case for the acquisition of the UK AI company Deepmind by US tech giant Google.
Talent is another front at which the UK and the US compete. The US, with its larger tech sector and higher salaries, draws talent from around the globe. The UK faces challenges in retaining top talent, compounded by an increasing reliance in higher education on international student fees, alongside increased visa restrictions. This threatens the UK’s academic edge and could divert international talent to the US or EU.
Implications for UK technology ambitions
Trump’s transactional approach to alliances creates a new uncertainty. He has suggested that the US role in NATO and the Five Eyes intelligence alliance should not be assumed without reciprocal offerings. Trump’s attitude has exposed asymmetries in the UK-US relationship and raises the question of whether the UK will have to comply with more US demands, and at what cost.
A second Trump term is a critical moment for the UK to strengthen sovereign capabilities and shore up alliances beyond the bilateral relationship with the US. Multilateral efforts such AUKUS (the Australia, UK, US security partnership), NATO, and EU relationships are essential fronts for investment in tech partnerships and collaboration. Yet both AUKUS and NATO include the US, and the UK’s post-Brexit relationship with the EU is still being repaired.
Focussing on AI technologies, a Trump deregulatory policy shift has potential risks for UK companies working closely with US firms. Will they have to choose between US-backed innovation partnerships and adhering to UK or EU safety standards? Given the UK’s championing of AI safety and responsibility, positioning itself as a global leader in this space, this might become an area of tension.
The EU, meanwhile, has doubled down on its regulatory framework for AI, pushing forward on comprehensive legislation that has drawn industry criticism for potentially stifling innovation and competition. To complicate matters further, the UK is not a member of the EU-US Trade and Technology Council. Being part of this bilateral engagement, despite its uncertain future under Trump could have offered the UK economic leverage and an opportunity to contribute to regulatory standards if relationships with a Trump administration became unpredictable.
Although the UK has no seat at that table, other alliances have already been sought with states that hold similar values. An example is the UK-Canada science of AI safety partnership and UK-Canada efforts on AI governance, which give the UK an opportunity to collaborate on responsible use of AI. These bilateral relationships should be forged across emerging technologies more broadly.
There might be an opportunity in the talent space for a UK advantage. Trump’s stance on immigration, particularly H1-B visas and other talent pathways, may be off putting to global tech talent. This could be an opportunity for the UK to position itself more favourably to ambitious workers, offering more attractive technology visas or establishing new tech focussed collaborations, like existing agreements with South Korea and Canada, to make international employment more accessible.
What next?
The UK is at a crossroads, carving out a distinct role that balances the competing pressures of US mercantilism and the EU’s stringent regulatory approach, amidst growing concerns over Chinese technological advancements.
Although the US is a key ally, especially regarding security, expected shifts under the Trump administration underline that the US is also a competitor when it comes to the UK’s technology aspirations. The Trump administration will likely add pressure on the UK to strengthen its sovereign capabilities, compete for talent, and build alliances outside of a potentially unpredictable US. The UK must balance these ambitions against its need for economic growth and national security considerations.