Is Relational Contracting Dead in the United States Government?

Posted on February 13th, 2025

First, let me say this is not intended to be political. It is purely about the changing environment of deal-making with the US Government.

Relational contracting—the practice of fostering long-term, trust-based partnerships in government agreements—has been a cornerstone of effective governance and diplomacy. However, recent developments suggest that this approach may be diminishing within the United States government under the leadership of President Trump. His transactional, winner-takes-all approach to negotiations raises questions about the future of cooperative contracting in public policy and international relations.

A Zero-Sum Mindset

The Trump administration’s approach to contracting, as illustrated by recent discussions on international policy, suggests a fundamental shift away from relational contracting. The assumption that the U.S. could take control of Gaza without compensating for property rights, even in a war-ravaged state, and relocate two million people at will demonstrates a unilateral approach that disregards partnership principles. His statements have, to date, shown little interest in fostering constructive relationships that provide mutual benefits to all parties involved. Instead, his rhetoric and actions indicate a preference for perceived wins over sustainable collaboration.

This approach has broader implications for governance and international negotiations. When transactional thinking replaces relational contracting, trust erodes, and long-term partnerships become fragile. Governments and businesses historically relying on cooperative agreements may find themselves navigating an unpredictable and often adversarial landscape.

Adapting to the New Reality

Given this shift, how should other governments and entities adapt their behaviour when engaging with the U.S. administration? A case study can be found in Canada and Mexico’s recent tariff negotiations. These nations convinced President Trump to suspend tariff impositions for 30 days by presenting previously announced actions as new concessions. This strategic framing allowed him to claim victory, highlighting the importance of understanding his psychological approach to negotiations.

Governments and institutions must now recognise the need for a tailored strategy when dealing with the U.S. administration. Key considerations include:

1. Psychological Mapping – Understanding the president’s perception of victory and how to frame agreements as wins for his administration.

2. Influence Analysis – Examining the role of White House staff, cabinet members, and influential figures such as Elon Musk in shaping contracting and policy decisions. What influence do you have?

3. Pre-emptive Strategy Development – Establishing a dedicated ‘war room’ to anticipate key policy and contracting issues over the next four years, developing adaptable playbooks for each scenario.

The Role of a Strategic War Room

Time is often the scarcest resource in negotiations. Preparing in advance by developing negotiation strategies and playbooks can significantly improve outcomes. A war room should consist of senior representatives from key government departments and experienced negotiators who can map out:

- Likely negotiation scenarios and responses

- Interdependencies between different policy areas

- Strategies to present concessions as valuable wins for the U.S. administration

- Coordination mechanisms with other nations to foster a unified approach

By investing in proactive strategy development, governments and institutions can navigate this evolving landscape more effectively, ensuring that even in a transactional environment, they secure the best possible outcomes.

Conclusion

While relational contracting may not be entirely dead, it is undoubtedly under threat. The shift toward transactional negotiations demands a strategic reassessment of how agreements are structured and presented. Understanding the psychology of the current U.S. administration, leveraging influence within its ranks, and pre-emptively strategising for upcoming challenges will be critical. By adapting to this new reality, governments and organisations can continue to secure favourable agreements, even in an era where cooperation is no longer the default approach.