The initial response of the US government was to enthusiastically embrace German unification. President Grant sent a congratulatory telegram to Wilhelm I praising the German people achieving their long sought-after unification. Carl Schurz, an exiled 1848 who became a Civil War general, newspaperman and Senator, flew the German flag from his offices despite his apprehensions about the role the Bismarck and the Hohenzollerns played in crushing the democratic revolutions in 1848. One rationale behind this eagerness was on the surface it appeared that Germany was following the example of the United States. Although the executive was undemocratic (the Kaiser was in theory head of state and the chancellor appointed by him), Imperial Germany was a federal entity with universal male suffrage. The American government also was quite leery of Napoleon III and there was a widespread belief that his pro-Southern sympathies acted against the Union during the Civil War.

This honeymoon period would not last though. The federal system of Imperial Germany was quite a different animal than that of the US and it soon became clear that Imperial Germany was not a democracy akin to the US. Imperial tensions over Samoa also hurt German-American relationships. Nevertheless, US-German relations remained relatively cordial, neither warm nor cold, between the two governments until the First World War.

Sources

Boemeke, Manfred Franz. Anticipating Total War: The German and American Experiences, 1871-1914 ; [Conference That Convened in Augsburg in July 1994 ; Second in a Projected Series of Five Conferences on "The United States and Germany in the Age of Total War, 1860-1945"]. Cambridge: Cambridge Univ. Press, 1999.

Trefousse, Hans L. Carl Schurz, a Biography. New York: Fordham University Press, 1998.

Wetzel, David. A Duel of Nations: Germany, France, and the Diplomacy of the War of 1870-1871. Madison: The University of Wisconsin Press, 2012.

The British government at the time was a Liberal administration under William Gladstone. Gladstone was outraged at Bismarck's annexation of Alsace-Lorraine without reference to the wishes of its inhabitants. The Foreign Secretary Lord Granville said Gladstone was "much oppressed with the idea that this transfer of human beings like chattels should go forward without any voice from collective Europe". However Gladstone was unable to persuade his Cabinet of the necessity of organising other neutral states in protesting against the annexation. The Cabinet did not want an intervention that was not backed by force. Gladstone retaliated by writing an anonymous article for the Edinburgh Review in which he claimed that there could not be a friendly relationship with Germany if they held over one million people against their will. However the Daily News soon leaked Gladstone's authorship, which led to much mockery that the British government's response to one of the most important events in modern European history was a tentative review article.

Gladstone, as an internationalist liberal, was alarmed at the undemocratic nature of the annexation and the growth of "Bismarckism, militarism, and retrograde political morality". However his attempt to organise a collective protest against this from the neutral European powers did not materialise.

However by far the most prescient reaction came from the Conservative leader, Benjamin Disraeli, who said on 9 February 1871:

Let me impress upon the attention of the House the character of this war between France and Germany. It is no common war, like the war between Prussia and Austria, or like the Italian war in which France was engaged some years ago; nor is it like the Crimean War. This war represents the German revolution, a greater political event than the French revolution of last century. I don't say a greater, or as great a social event. What its social consequences may be are in the future. Not a single principle in the management of our foreign affairs, accepted by all statesmen for guidance up to six months ago, any longer exists. There is not a diplomatic tradition which has not been swept away. You have a new world, new influences at work, new and unknown objects and dangers with which to cope, at present involved in that obscurity incident to novelty in such affairs. We used to have discussions in this House about the balance of power. Lord Palmerston, eminently a practical man, trimmed the ship of State and shaped its policy with a view to preserve an equilibrium in Europe. ... But what has really come to pass? The balance of power has been entirely destroyed, and the country which suffers most, and feels the effects of this great change, is England.

Considering the history of Europe afterwards, this was a remarkably prophetic speech.

Sources: Richard Shannon, Gladstone: Heroic Minister: 1865-1898 (Allen Lane, 1999). William Flavelle Monypenny and George Earle Buckle, The Life of Benjamin Disraeli, Earl of Beaconsfield. Volume II. 1860–1881 (London: John Murray, 1929).