A “special relationship” should include thriving tech cooperation without burdensome regulations. 

The Trump administration has aggressively pushed new technology policies to ensure America sustains its leadership role as the world’s dominant provider of artificial intelligence (AI) while accelerating technological decoupling from China. U.S. technological leadership would also gain a boost through an alliance with the United Kingdom, the world’s third-largest tech producer. For the UK, this would mean major additional investment at a time when its economy is flat, though its tech sector continues to grow.

By working with the UK, the United States gains additional leverage to end reckless and harmful policies imposed by the European Union (EU). A de facto U.S.-UK tech free trade zone should be established and form a model for other countries to seek similar accords with the United States.

On tech, the Trump administration’s message to the EU has been blunt but respectful: we are glad to work with you, but do not try to regulate U.S. AI model development, especially when Europe has no major AI or tech innovators.

Vice President JD Vance crystallized this doctrine in a speech at the AI Strategy Summit, a gathering of world leaders and tech luminaries, in Paris on February 11: “The United States is the leader in AI, and our administration plans to keep it that way…We’re developing an AI action plan that avoids an overly precautionary regulatory regime while ensuring that all Americans benefit from the technology and its transformative potential.”

The vice president added with his European audience in mind, “We invite your countries to work with us and to follow that model if it makes sense for your nations. However, the Trump administration is troubled by reports that some foreign governments are considering tightening the screws on U.S. tech companies with international footprints. Now, America cannot and will not accept that…”

The vice president referred to a series of recently enacted, onerous EU laws. These include the Digital Services Act and the Digital Markets Act, which were the focus of a February 21 executive order. The bottom line is that the EU is on notice to retreat from enforcing these laws and begin repealing them or risk losing the United States as a tech ally. 

All of this puts the UK in an interesting and enviable position. While the UK has semblances of EU tech policy—they impose digital taxes of 2 percent on U.S. tech companies with revenues exceeding £500 million (approximately $650 million) and UK revenues above £25 million (approximately $32.5 million)—along with intrusive operating restrictions, the government is open to a better tech path forward.

Even before the election of President Trump, UK prime minister Keir Starmer understood that AI and technology drive economic growth and that growth is imperative in the UK now.

During an October 14 speech at an event his government held to attract international investment to the UK, Starmer was direct, saying, “It’s time to upgrade the regulatory regime…We will rip out the bureaucracy that blocks investments. We will march through the institutions and we will make sure that every regulator in this country, especially our economic and competition regulators, takes growth as seriously as this room does.”

Starmer followed through on his promise. On January 21, via a subordinate, he fired Marcus Bokkerink, the head of the Competition and Markets Authority, the UK’s primary business competition regulator. The prime minister is looking for officials who will find significant ways to spur economic growth, and Bokkerink did not meet Starmer’s standards.

These actions are in sharp contrast to those of the EU. Despite receiving a September 2024 report from Mario Draghi, the esteemed former President of the European Central Bank, on the need for drastic economic reform, the EU has done nothing to move in that direction. It has also failed to take any action, even in the form of positive lip service, in response to President Trump’s February 21 executive order about digital service taxes and related attacks on US tech companies. 

Against this backdrop, Starmer has been laser-focused on forging an alliance with the United States on AI and high technology, as discussed at a February 27 meeting at the White House with President Trump.

A February 26 press release from the prime minister’s office, issued the day before the meeting, said, “The discussion will have a particular focus on the opportunities that further technology and AI partnerships could deliver…The U.S. and UK are the only two allied countries in the world with trillion-dollar technology eco-systems, and the Prime Minister will make the case for further integration…”

The White House meeting was the first step in this process, and Starmer said it went well: “Instead of over-regulating these new technologies, we’re seizing on the opportunities they offer. We have decided to go further, to begin work on a new economic deal, with advanced technology at its core.”

And the UK’s tech sector is impressive, especially compared to the EU as a whole. 

According to Stanford University’s 2024 AI Index Report, which is issued annually in April, the United Kingdom ranks third globally for AI private investment, behind the United States and China. In 2023, the UK attracted $3.8 billion in such investments, nearly twice as much as Germany ($1.9 billion) and Sweden ($1.89 billion). Indeed, only four EU countries had investments of $0.36 billion or more in AI.

Moreover, private-sector AI investment in the UK is well-established. Between 2013 and 2023, the UK had $22 billion in cumulative AI investments. Among EU countries, Germany was a distant second ($10 billion) for this period, while the United States towered over all countries at $335 billion.

Beauhurst, a UK consulting firm, has also measured the growth and strength of the UK’s AI sector. In a January 8 report, the firm found that “The UK—particularly the golden triangle of London, Oxford, and Cambridge—is a popular place for artificial intelligence startups…There are currently 2,361 AI companies across the UK that have hit one or more of our high-growth signals…” The firm found that the UK AI market had mushroomed by almost $10 billion worth of equity investments between 2022 and 2025.

The framework for a U.S.-UK deal, indeed a tech alliance, should include eliminating burdensome regulation and taxation of U.S. tech companies in the UK in exchange for greater investment. With Starmer’s party in power, it is more likely that the UK will change its laws than the European Parliament will change the laws binding its twenty-seven member countries.

A U.S.-UK tech alliance is a win for both parties and should serve as an example for necessary change throughout the EU. Indeed, it can serve as a model for global cooperation among all nations that share, or claim to share, the values of the United States.

Paul Steidler is a Senior Fellow with the Lexington Institute, a public policy think tank based in Arlington, Virginia. He researches, studies, and discusses federal government policy on technology and logistics issues, identifying ways the federal government can work more efficiently. This includes analyzing the costs and impacts of federal government policies, as well as their interactions with the European Union and other international organizations.

Image: Joshua Sukoff / Shutterstock.com.

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