The UK and EU must decide whether to coordinate a response to Donald Trump's proposed US import tariffs or cut separate deals with the new president, the House of Lords heard this week.

At a hearing examining the UK's post-Brexit relationship with the EU, Wolfgang Münchau, co-founder and director at research company Eurointelligence, said the EU and UK would both find it tough to strike a trade deal with the US, and could work together to form a joint response to the threat of US import tariffs, which Trump said would affect global trade.

In the run-up to the 2016 Brexit referendum, IT vendors including [1]IBM , [2]Microsoft , HP, [3]Cisco, and EMC all spoke against the UK's departure from the world's richest trading bloc.

It could well be that he uses tariffs as a transactional negotiating tool in discussions about industry relocation ...

On January 22, Trump said trade surpluses racked up by the EU and others had an [4]unfair impact on the US . "The European Union is very, very bad to us ... they're going to be in for tariffs. It's the only way ... you're going to get fairness."

Speaking to the House of Lords' European Affairs Committee, Münchau said while both the EU and the UK might seek a trade deal with the US, it would be tough to achieve – and it's likely neither would succeed.

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"We will know a lot more in the next few days, but it could well be that he uses tariffs as a transactional negotiating tool in discussions about industry relocation," he said.

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Despite the UK's efforts to talk up the possibility of a "reset" on its trading relationship with the EU, the problem of Trump's tariffs will be the more dominant issue determining their future relationship.

"There is a case to be made for the UK and the EU to coordinate their response to Trump, but there's also a temptation for either side to cut a special deal with Trump," he said. "I think [the issue] is ultimately likely to affect the UK-EU relationship more than the issues in respect of resets."

[8]Tariff uncertainty looms large over budget conscious CIOs

[9]Trump China tariffs to 'overshadow' the 'progress' of AI PCs

[10]Now Trump's import tariffs could raise the cost of a laptop for Americans by 68%

[11]Tech titans hide in shadows awaiting Trump tariff threats

Yesterday, the EU's new trade chief responsible for post-Brexit negotiations [12]told the BBC that "reset" discussions between the UK and EU might include a "pan-European [customs] area."

The prospect of US tariffs on the EU – the details of which are yet to be defined – creates uncertainty for IT organizations. For example, Germany's SAP provides application software vital to the continued operation of Apple, Walmart, and a number of US government departments.

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Meanwhile, any prospect of greater trade alignment between the EU and the UK would need to accommodate recent EU legislation including the AI Act, the Digital Services Act, and the Digital Markets Act, all of which Münchau said were skewed in favor of consumers at the expense of businesses operating in these markets.

"[The legislation] is very different from that in the UK, and the digital area is certainly an area where the UK has a competitive advantage. The UK has far more business startups than the EU, certainly in AI, and they are more likely to achieve scale than the EU," he said. Thus, the UK would be wise not to align too closely with the EU on these aspects of digital and technology law.

"It's not the UK which should adjust to the EU, but the other way around at some point, because the EU now has this problem of unraveling this legislation, which is going to be very difficult, and it might be an opportunity." ®

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[1] https://www.theregister.com/2016/04/26/imb_says_no_to_brexit/

[2] https://www.theregister.com/2016/05/17/brexit/

[3] https://www.theregister.com/2016/05/20/emc_comes_remain/

[4] https://www.theregister.com/2025/01/21/cio_value_budget_tariffs/

[5] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/personaltech&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2Z5PHMdJudNbAEDmQc2xBfwAAAA8&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0

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[8] https://www.theregister.com/2025/01/21/cio_value_budget_tariffs/

[9] https://www.theregister.com/2025/01/09/trump_tariffs_ai_pc/

[10] https://www.theregister.com/2025/01/07/trumps_tariff_electronics_prices/

[11] https://www.theregister.com/2025/01/03/tech_titans_hide_in_shadows/

[12] https://www.bbc.co.uk/news/articles/cq5g48yx0dvo

[13] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/personaltech&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44Z5PHMdJudNbAEDmQc2xBfwAAAA8&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0

[14] https://whitepapers.theregister.com/