NEW YORK: European Union trade commissioner Maroš Šefčovič described the recent US-EU trade agreement in unvarnished terms. Agreeing to a 15% tariff on most exports to the United States and promising to purchase $750 billion worth of American energy over three years and to invest another $600 billion in the US (not including an unspecified amount in additional orders of US-made military hardware) was “clearly the best deal we could get.”

But was it? Since Donald Trump’s return to the White House, not only America’s trade partners, but also its universities, law firms, and major media have had to ask: Does it pay to play in the theater of naked power, or does transacting with Trump simply normalize pervasive lawlessness?

The question is fundamental, because it makes no sense to speak of “optimal” transactions – or of operative markets – in a state of lawlessness. Markets cannot function without the stability and predictability which the rule of law provides. In its absence, only spectacle and coercion remain.

Reliable dealmaking depends on two essential conditions: good faith and a stable set of rules, backed by reliable enforcement mechanisms, that protect against capricious interpretation or unilateral revision of the pact’s terms.

Motivation is easily disguised. But if one has a long enough history of saying one thing and doing another, an inference of bad faith is reasonable. In Trump’s case, we need only recall his record of bad faith dealing, going as far back as the construction of his Taj Mahal Casino in Atlantic City, where his failure to pay $69.5 million owed to 253 subcontractors bankrupted many small businesses. Similar accounts have plagued many of his enterprises, including the Trump International Hotel, Trump Tower, Trump National Doral Miami, Trump University, Trump Shuttle, Trump Steaks, Trump Vodka, and Trump Ice.

While Trump’s reputation for bad-faith dealing precedes him, since returning to power he has broken free of the rule-based constraints intended to rein in such behavior.

Consider his recent “dealmaking” with some of America’s largest and richest law firms. To date, nine firms, facing a range of punitive measures – from revocation of security clearances to barring from government contracts and even government buildings (including federal courtrooms) – have agreed to provide a total of $940 million in pro bono legal services for pro-Trump causes. Others have chosen to challenge Trump’s coercive executive orders in court, with four securing rulings that block or nullify them.

So why did nine firms, staffed by America’s best and brightest lawyers, capitulate without a fight? Their likely rationale reflects an uncomfortable truth: being on the right side of the law is no longer enough. Many of America’s top lawyers acceded to naked coercion because they concluded that the Trump administration, having thoroughly subordinated federal law enforcement to the president’s will, could always find a way to punish them. In short, they realized they no longer enjoyed the safeguards ordinarily provided by the rule of law.

And that is the core of the problem that they and others face in putative dealmaking with Trump: actual and wannabe strongmen impulsively defy whatever constrains them. We already have seen Trump attempt to overturn the 2020 election after losing the popular vote. He later called for “termination” of the Constitution so that he could return to the White House without a new election.

Trump’s second administration picked up where his first left off. Soon after his inauguration, he resorted to claims of a national emergency as a basis for exercising extraordinary power. This includes invoking the Alien Enemies Act, a 1798 law that can be used only in the event of war, “invasion,” or a “predatory incursion” by a foreign government. Trump deployed the AEA to round up alleged members of the Venezuelan drug gang Tren de Aragua. But similar reasoning could be used to target just about anyone from a country that is a source of illegal drugs or undocumented immigrants.

Likewise, Trump’s executive order ending automatic citizenship for those born on US territory contradicts the first sentence of the 14th Amendment of the US Constitution: “All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the state wherein they reside.”

Plainly, Trump does not feel constrained even by the supreme law of the land. How can one expect a “deal” to remain stable or be enforceable when it is based on naked power rather than the rule of law?

Many of America’s top universities are facing coercive and dubiously lawful threats – including freezing billions of dollars in federal grants and contracts and revoking the universities’ longstanding tax-exempt status.

In deciding whether to enter into deals to avoid Trump’s wrath they are confronting the same challenge as America’s trade partners. Is it better to pay the ransom now and ignore the long-term implications, particularly the likelihood of further coercion? Or should they stand together and refuse to transact under conditions that mock the very principles of good faith and enforceability upon which any duly negotiated agreement depends?

Transactions that are subject to capricious revision and lack credible enforcement mechanisms are worthless. Dealmaking without the rule of law to stabilize content and secure future expectations is self-deception masquerading as self-interest.

But even if we were to accept such agreements at face value, are they really “the best deal we could get?” An affirmative answer assumes that academic, professional, national, and individual freedom and integrity are chips to be bargained away as a hedge against short-term financial loss. In that case, our willingness to make the deal may already signify that we have given up on the fundamental principles that sustain and justify markets in the first place.

Richard K. Sherwin, Professor Emeritus of Law at New York Law School, is a co-editor (with Danielle Celermajer) of A Cultural History of Law in the Modern Age (Bloomsbury, 2021).

 Copyright: Project Syndicate, 2025.