The good news: The US Director of National Intelligence, Tulsi Gabbard, is fully aware of the request and has responded to a letter from Congress about it. She has stated that in her opinion, while this plays out, it would actually be possibly illegal for the UK to make this request, let alone Apple to comply with it, under the US CLOUD Act. If this is true, Apple will have no choice but to leave the UK than comply, and the UK will find themselves in a no-win situation for this demand.
Edit: This is in addition (for better or worse, I’m just the messenger) to Trump personally calling the EU’s rules for tech unfair, JD Vance giving a speech accusing the UK and Europe at large of violating free speech, the UK’s prime minister being personally teased by Vance at their meeting about free speech (overshadowed by Zelensky’s meeting later the same day), and FCC Commissioner Brendan Carr stating the EU Digital Services Act is incompatible with American free speech values. In my opinion, this turned out to be the dumbest possible time for the UK to attempt such a move, even if it wasn’t foreseeable when the demand was issued.
That's great news, now Ron Wyden won't have to feel so lonely when congress ignores his demands to end illegal surveillance of American citizens. It'll be like a hunky-dory, bipartisan "anti-surveillance surveillance club" or something!
So Apple either has to fight this in court, compromise security worldwide, disable iCloud worldwide or exit the UK market.
The same law can arguably be used to compel Apple to backdoor phones and devices themselves as well.