Sir Keir Starmer is poised to announce Lord Mandelson as Britain’s new ambassador to the United States as the prime minister prepares for Donald Trump’s presidency with the first political appointment in the role for almost half a century.
The prime minister believes that Mandelson has the trade expertise and networking abilities to bolster the UK’s interests during a delicate period for relations with the US.
Trump has said he will introduce blanket tariffs and his allies have warned that the UK will have to choose between a deal with the US and the “socialist” European Union. Starmer has rejected the suggestion that it is a “binary” choice.
Mandelson is a close ally of Morgan McSweeney, Starmer’s chief of staff, and was backed for the role by David Lammy, the foreign secretary. Mandelson was seen in the Foreign Office last week.
The appointment represents a remarkable political comeback for Mandelson, who last served in government 14 years ago when Gordon Brown was prime minister.
He is a Labour veteran who has held several high-profile roles, including business secretary and effective deputy prime minister under Gordon Brown. During Tony Blair’s premiership he was appointed European commissioner for trade, which was one of the key factors in giving him the new job in Washington.
One source said that Starmer’s decision to make a political appointment reflected how seriously he takes the UK’s relationship with the US, adding that Mandelson is a “significant figure in his own right”.
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Dame Karen Pierce, the current ambassador, will remain in post until the end of January when Trump is inaugurated. She has extensive contacts in Republican circles and was credited with securing a dinner meeting between Trump, Starmer and Lammy in November.
Mandelson has been picked ahead of at least three other candidates for the job. David Miliband, the former foreign secretary, Baroness Amos, a former development secretary, and Baroness Ashton of Upholland, who succeeded Mandelson as European trade commissioner, were all said to be in the running.
Starmer is attempting to strengthen relations with Trump’s team. McSweeney held talks with Susie Wiles, the political strategist who masterminded Trump’s re-election campaign, in the US this month.
Trump has spoken warmly about Starmer and the special relationship, despite their political differences. He described Starmer as a “very nice guy” and said he had been “very popular” in the run-up to the election.
However, during the campaign Trump also accused Labour of election interference after the party’s head of operations said on LinkedIn that 100 current and former staffers were helping Kamala Harris, the Democratic nominee.
Mandelson has previously told The Times’s How to Win an Election podcast that Britain must find a path between the US and the EU if Donald Trump goes ahead with his pledge to introduce blanket tariffs on goods.
“We have got to navigate our way through this and have, I’m afraid, the best of both worlds,” he said. “We have got to find a way to have our cake and eat it.”
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Trump has said that he will impose tariffs of up to 20 per cent on all imports when he enters the White House, with higher levies of 60 per cent on imports from China.
The National Institute of Economic and Social Research said it had calculated that the tariffs would halve GDP growth in the UK, amounting to a £21.5 billion hole in Rachel Reeves’s tax and spending plans, and push up inflation by 3 to 4 percentage points.
Mandelson said the UK cannot give up on transatlantic trade. He said: “We cannot come out of the largest export market, difficult enough as it is to trade freely there, having left the European Union. But we still trade. It’s our biggest export market still. We can’t leave that.
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“And we have to mitigate the sort of barriers and risks that we’ve taken on as a result of Brexit in the European market. And transatlantic trade and investment is huge for us.”
However, he also warned against a “20th-century old-style” free trade agreement with either of the two trading blocs.
Mandelson said: “We’ve just got to look forwards to a more 21st-century set of trading arrangements, which are more to do with clicks and portals than goods and mortar.”
The EU is expected to impose retaliatory tariffs if Trump pushes ahead with tariffs. It has drawn up plans to impose levies on US imports such as Kentucky bourbon whiskey, Levi’s jeans and Harley-Davidson motorcycles.
Although UK officials have also drawn up plans to retaliate, ministers do not want to take a “protectionist” approach and are concerned that any reaction could see a more punitive response from Trump.
The government also believes the new president will probably water down his threat of tariffs because of their impact on inflation in the US. Ministers believe a sector-by-sector approach is more likely instead, with a focus on tariffs on steel, aluminium, technology and cars.
Two thirds of the UK’s annual £188 billion worth of exports to the US is in services, not goods.