Lord Mark Sedwill unpacks the implications of the US election on London and the wider UK

Lord Sedwill was formerly Cabinet Secretary & Head of the Civil Service to Prime Ministers Theresa May and Boris Johnson (2018-20), as well as National Security Adviser (2017-20), Permanent Secretary at the Home Office (2013-17), and British Ambassador and NATO Representative in Afghanistan (2009-11).

First, let me set some context. It’s important we recognise the significance of this win for both Donald Trump and the MAGA (Make America Great Again) movement. Trump and the MAGA movement have taken over the Republican Party, but on this occasion, unlike in 2016, he’s won the popular vote. And won big. Trump’s won by 5 million votes, over 50% of those who voted, while also winning the Electoral College comfortably, by 312 seats. The Republicans have also won the Senate, and, at the moment, it looks as though they will hold the House of Representatives. It’s a clean sweep in Washington – something that wasn’t true in 2016.

It’s also important to note that this time around Trump and his team are prepared. In 2016, the win was unexpected and so it took time for Trump and his team to work out what to do with his presidency. This time, he’s ready to go.

I was National Security Advisor for nearly the whole of his first term. Indeed, I took over as National Security Advisor a couple of months after his inauguration and left a couple of months before the 2020 election. This meant I’ve met Trump several times – dealing with both him and his team a great deal during this period.

Before we talk about the man himself, let’s take a step back – the world in 2024 and 2025 is not the same as when he was elected in 2016, nor when he moved on in 2020. It is not, contrary to what you’ll read in the media and a couple of academic journals, the most dangerous period in history. There were periods during the Cold War, notably in the early sixties and the early eighties where we came within a hair’s breadth of nuclear war.

The current political climate is not that of the Cold War period. But it is probably one of the most complex periods. Elections everywhere, at national and local level, in the United Kingdom, the US and across the EU, are won largely through a retail offer to the individual citizen. A retail offer essentially tries to answer one question – are you better off than you were four years ago? Are you better off than you were at the last election?

By better off, we don’t just mean economically better off. We mean do you feel safe from crime? Are you comfortable with the state of society? Does the world feel like a safe place for you – for you and your kids?

These are essentially the questions politicians try to ask and answer in election campaigns. But, when they get into government, they’re dealing with a phenomenally complex environment. For example, governments right now need to deal with the top line big environmental issues and climate change, but also the subsets of policy which sit within these: biodiversity, antimicrobial resistance, future pandemics, plastics and so on. This comes alongside massive socioeconomic change, the technological revolution, the imbalances in the world economy, the resurgence of protectionism.

Then, we must consider the aging nature of populations. Over the next 25 years, everywhere across the globe will have aging populations apart from Sub-Saharan Africa. In 2050, half the babies born of the world will be born in Sub-Saharan Africa. And that’s a huge demographic shift in the world with which policymakers will have to wrestle.

Place this demographic shift alongside geopolitical tensions. We need more sophisticated and deeper international collaboration to deal with issues of climate change and technical revolution. But this comes at a time of rising international tensions, the US and China, the resurgence of non-alignment and crises across the world and not just with the headline crises in Ukraine and the Middle East. Two to watch carefully, which could take us back to those flashpoints from the Cold War are in the Western Pacific, notably the Korean Peninsula and Taiwan. These domestic and international pulls, with only a term to prove their worth, are what governments are grappling with across the globe.

So, what will President Trump in his second term do? Well, as previously mentioned, the first thing to note is that he’s coming in with an agenda and with the governmental and policy knowledge to deliver his ideas. But, he will be a second term president. He’ll have to face midterms in a couple of years which are likely – looking historically – to go against him. And thereafter, the political focus will start to move towards the 2028 presidential election. This battle will be fought between two new candidates. It won’t be Trump and Biden next time – constitutionally in Trump’s case. This sets a backdrop of increased government competence by Trump II, but a shorter period in which to turn the country around.

There are a series of big things I think we need to understand that will happen during the Trump presidency. The first is big government reform – with Elon Musk at the forefront. Second is the conversation on immigration, a primary issue for America.

We’ll see changes in US relations with Latin America – particularly Mexico – with increased demands on America’s allies to do more in security and defence. We know government budgets are already overstretched, so we need to see how this plays out for situations in the Middle East and Ukraine. But I don’t think he’ll want to be the president who lost Ukraine, having seen the impact of Biden being the president who lost Afghanistan.

Next up, climate change. Trump will take the US out of the Paris climate change agreement. He’s already done this, and the climate agreements held following his decision. But, will they hold this time? The costs of the green transition are becoming more apparent worldwide. Will the architecture hold, or will it start to unravel?

Finally, the last in the series, will be the economy and trade. We can expect more protectionism, both more tariffs, which characterised Trump’s first administration. But this will be done while maintaining the massive subsidies into the US economy which took place under the Biden administration. Short term, we’ll see a shift of economic activity including capital into the US. Medium term, however, there will be significant inflationary pressures.

What does that mean for London, the UK and policymakers internationally? If you buy into this model, we need to consider three things.

First, we must recognise post Brexit that the UK is an offshore economy – a model to which we’ve not yet adjusted. The EU, the US and China are going to be preoccupied with each other. They’re not going to concentrate on the UK. Alongside this, we’re likely to see competitive protectionism between these three economic powers. The EU, however, will not be able to stand fast with Trump I tariffs, Biden subsidies and Trump II tariffs, affecting the trade and competitiveness of the EU. This means there has to be a focus on the competitiveness agenda, on growth, but also on resilience and on defence. This will mean dealing with the supply aspects of our economy, as much as dealing with our overall fiscal position.

Second, Donald Trump has a transactional view of the world. This is true for government, and true for business. His trade representative who held the position in his first administration is a man I know well. He fundamentally believes trade must be reciprocal. This may provide opportunities, particularly given the importance of services and invisibles for the UK. Indeed, three quarters of our demand is consumption, supply services, meaning our assets are intangible. We may not be in the same position as others, but we will need to secure reciprocal trade advantages from the US. A reminder – any reciprocal trade will include defence as part of the bargain.

And third, I would say simply recognise the impact. Recognise that there will probably be a surge into the US economy in the short term. But the inflationary impact in the medium term will undoubtedly rise with real interest rates. This will affect assets, businesses, and the costs of government. And once borrowing and protectionism are imposed, it’s very difficult to unwind.

The reality is, it’s going to be an extraordinarily challenging period to be in government. Governments are first going to have to recognise that the assumptions they might have made as they became elected are no longer the assumptions on which they’re going to have to operate. It’s going to take hard decisions. It’s going to take what Anthony Seldon, the biographer of prime ministers, calls leaders as educators – people who are willing to take the citizens with them, explain the challenging nature of the world we’re living in and explain that we can’t simply have everything that we want.

In a world in which defence, in which protectionism, in which climate risks are rising, some of the elements of our economic and social model are going to have to change. We will fall behind if we are not agile. The businesses and countries which react with agility and realism will prosper. I firmly believe we can be one of those, but we will have to be realistic with ourselves if we are to thrive alongside a Trump administration in the years ahead.