Sir Keir Starmer is set to appoint Lord Mandelson as the UK’s next ambassador to the United States, marking the first political appointment to the role in nearly half a century.

The Prime Minister believes that Mandelson’s background in trade and extensive network of contacts will bolster Britain’s position in what promises to be a delicate period for UK-US relations.

Donald Trump, the incoming US President, has threatened to impose blanket tariffs on foreign imports, raising concerns about potential challenges for Britain. His allies have warned that the UK may have to choose between a deal with the US and one with the “socialist” European Union. Sir Keir, however, has dismissed the notion that a binary choice must be made.

Lord Mandelson, a seasoned Labour figure and close ally of Morgan McSweeney, Starmer’s chief of staff, has been backed by David Lammy, the Foreign Secretary. Mandelson was seen at the Foreign Office last week. His appointment represents an extraordinary political comeback, as he last held government office 14 years ago during Gordon Brown’s premiership. He was previously Business Secretary and effectively acted as deputy prime minister, and also served as the EU’s Trade Commissioner under Tony Blair—a role that played a key part in securing this new Washington post.

One source described the decision as evidence of how seriously Starmer takes relations with the US, and noted that Mandelson is a “significant figure in his own right.”

Dame Karen Pierce, the current ambassador, will remain in her post until the end of January, when President-elect Trump is inaugurated. Dame Karen, who has built extensive Republican contacts, helped secure a dinner meeting between Trump, Starmer, and Lammy in November.

Mandelson’s selection follows intense speculation about who would take the role. David Miliband, Baroness Amos, and Baroness Ashton of Upholland were all considered strong contenders.

Sir Keir is keen to strengthen ties with the Trump administration. Earlier this month, McSweeney met with Susie Wiles, a key strategist behind Trump’s re-election campaign, in the US. Although Trump and Starmer differ politically, the US president-elect has praised the UK leader as a “very nice guy” who was “very popular” ahead of the election.

Despite such cordial words, tensions remain. During the campaign, Trump accused Labour of election interference after the party’s head of operations revealed that 100 current and former staffers were helping Kamala Harris, then the Democratic nominee, on LinkedIn.

Mandelson has previously stressed the importance of steering a careful path between the EU and the US if Trump follows through on his threat to impose blanket tariffs on imported goods. “We must find a way to have our cake and eat it,” he told The Times’s How to Win an Election podcast, emphasising that Britain must avoid being forced into an either/or choice between the two trading blocs.

Trump has suggested tariffs of up to 20 per cent on all imports, with even steeper levies of 60 per cent on goods from China. The National Institute of Economic and Social Research has calculated that such measures would halve UK GDP growth, creating a £21.5 billion hole in Rachel Reeves’s tax and spending plans, and push inflation up by 3 to 4 percentage points.

Mandelson maintains that Britain cannot abandon its transatlantic ties, nor can it walk away from the EU’s enormous market. However, he cautioned against reverting to outdated notions of free trade agreements, arguing that future deals must focus on modern aspects of commerce: “We’ve 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,” he said.

In the event Trump presses ahead with tariffs, the EU is expected to respond with its own retaliatory measures on US exports such as bourbon whiskey, Levi’s jeans, and Harley-Davidson motorcycles. Though UK officials have contingency plans, ministers are wary of a protectionist stance that might provoke a more severe US response. They also suspect the new president may water down his tariff threats to avoid stoking inflation at home, likely targeting only specific sectors—such as steel, aluminium, technology, and automotive—rather than applying broad-based tariffs.

It is notable that two thirds of the UK’s £188 billion of annual exports to the US are in services rather than goods, giving Britain a degree of resilience against potential trade turbulence.

By entrusting the ambassadorship to Mandelson, Starmer is sending a clear signal that the UK aims to navigate these uncertain waters with diplomatic skill, informed expertise, and the hope of balancing the country’s global interests.