Take this from a guy who saw someone go through a trial for doing The Very Bad Thing:
You will give them the password.
This is how it works:
"If you give us the password and let us prove you're innocent we'll let you go. If there's anything in there that would prove you guilty we'll reduce the sentence. If you don't give us the password and we have to crack the encryption ourselves and we find out you're guilty, you're going away for a very long time."
And then of course you give them the password, they find enough evidence to make you guilty and they don't reduce the sentence.
They just inflate the original sentence to a much worse sentence, and then deflate it to the level they were going to hit you with anyways.