Lord Peter Mandelson is a “really good fit” to become the next UK ambassador to the US, a Cabinet minister has said as the Labour grandee is expected to be named to the post.

Lord Mandelson, who served in the cabinets of Sir Tony Blair and Gordon Brown, is poised to be the UK’s next top diplomat in Washington, in a political appointment as Donald Trump returns to the White House.

The tenure of Dame Karen Pierce, the current office holder, is expected to come to an end in early 2025 and Lord Mandelson had been widely tipped as the person next in line for the job.

Lord Mandelson is “an individual of very significant international standing” and an experienced politician, Transport Secretary Heidi Alexander said.

His trade policy experience, including as an EU trade commissioner, would be “really important” at a time when Mr Trump has threatened to introduce new tariffs, she said.

Transport Secretary Heidi Alexander said Lord Mandelson would be a ‘good fit’ for the job (James Manning/PA)

“We need someone as the next ambassador to the US who is going to be able to promote our economic and security interests with one of our closest allies, and so I think he is a really good fit for the job,” Ms Alexander told Sky News.

A source said that the move shows how important the UK sees “our relationship with the Trump administration” and described Lord Mandelson as somebody with “unrivalled” political experience.

The source said: “The fact the Prime Minister has chosen to make a political appointment and send Lord Mandelson to Washington shows just how importantly we see our relationship with the Trump administration.

“We’re sending someone close to the Prime Minister with unrivalled political and policy experience, particularly on the crucial issue of trade. He’s the ideal candidate to represent the UK’s economic and security interests in the USA.”

The move would come as Mr Trump is set to be inaugurated for the second time, with questions over what a second Trump presidency could mean for the UK.

Lord Mandelson was a key figure in New Labour under Sir Tony Blair (James Manning/PA)

Mr Trump has pledged to introduce wide-ranging tariffs on the first day of his new administration, which starts on January 20, with experts predicting damaging consequences for Britain’s goods trade with the US.

On Thursday, Prime Minister Sir Keir Starmer said that the UK would “have to make sure that we avoid tariffs” as he faced questions on his approach to the incoming US president.

He told the Commons Liaison Committee he was “alive to the danger of tariffs” but would not “speculate as to what the incoming president might do”.

He said: “I am not a fan of tariffs and, therefore, we have to make sure that we avoid tariffs.”

Former British ambassador to the US Lord Kim Darroch told BBC’s Newsnight that he thought it was a “good appointment”.

Speaking to the programme, he said: “I’ve been saying for a long time ever since the election outcome that I thought Peter Mandelson was the right man for the job and I’m glad that it’s been announced.”

Lord Darroch was in post during Mr Trump’s first presidency but quit his stateside role in 2019 after messages he wrote criticising the administration were leaked to the press.

The Times reported Lord Mandelson was chosen ahead of former foreign secretary David Miliband, ex-development secretary Baroness Amos and Baroness Ashton of Upholland, who served as European trade commissioner.

In November, Lord Mandelson, the former MP for Hartlepool, told the BBC that he would be “very interested” in giving advice on trade to whoever got the job.

Speaking on the BBC’s Sunday With Laura Kuenssberg programme, Lord Mandelson said he was “more in favour of a new relationship rather than a special one” with the US.

He said at the time that nobody had spoken to him about the job.

Lord Mandelson was one of the architects of New Labour, helping to restore the party to power in the 1990s.

He served as trade secretary and Northern Ireland secretary under Sir Tony but stood down as an MP in 2004 to become a European Commissioner.

He returned to government in 2008 when Mr Brown awarded him a peerage and appointed him business secretary.

More recently, Lord Mandelson stood to be the next chancellor of Oxford University but lost out to former Conservative leader Lord William Hague.