Argentinian President Javier Milei has faced serious challenges in the country's economy and has turned to US President Donald Trump for help. The leaders of the two countries met at the UN General Assembly in New York, where Trump promised his full support for Argentina. US Treasury Secretary Scott Bessent also promised to offer “all options for stabilizing” the Argentine economy, including a direct loan. However, some voters in the US are unhappy with such support from the American leader, who at the beginning of his term said he would focus on domestic issues. Since taking office, Trump has cut billions of dollars in financial aid to foreign countries, but in the case of Argentina, he is willing to make an exception.
How is Milei trying to save Argentina's economy?
Javier Milei, a libertarian and free-market advocate, was elected president of Argentina at the end of 2023. As Bloomberg notes, during his tenure, annual inflation in the country has fallen from 289% to 34%. The Argentine leader is doing everything in his power to keep the peso strong in order to prevent a new surge in inflation.
However, economists believe that his strategy has ultimately led to the destruction of Argentina's economy in other areas. Milei expected a V-shaped economic recovery, but since he took office, the country's unemployment rate has risen from 5.7% to 7.6%. Peso inflation has also slowed economic growth and deprived Argentina's central bank of the ability to replenish its dwindling reserves. Many Argentines complain that at the end of 2023, they could buy more goods and services with their salaries than they can now.
In mid-September, Argentina's central bank spent $1.1 billion of its $20 billion reserve in just three days to support the peso. However, next year, the country needs to pay off about $9.5 billion in debt, which could be difficult for a country with rapidly dwindling reserves of only $20 billion.
Milei's problems are not only related to the Argentine economy, but also to the loss of his own position in the eyes of voters and the opposition as a leader capable of leading the country out of crisis.
It all started on September 7, when it emerged that Milei's sister was involved in a corruption scandal. After that, he lost the election to the legislative assembly in the province of Buenos Aires. His party is also losing ground in opinion polls ahead of the congressional elections on October 26. Voters, who were already trying to adapt to the economic slowdown and the cancellation of many familiar subsidies, were outraged by cuts to vital investments in health care and education. If Milei is left without sufficient support in Congress, he will not be able to continue his free-market program and is unlikely to be able to keep the peso from falling and inflation from soaring.
Why is the US helping Argentina?
The only way out for Milei now is US assistance. As Bloomberg notes, the US plans to provide Argentina with a $20 billion swap line and is ready to buy up the country's foreign bonds. According to Bessent, the US is also ready to provide a reserve loan from the Treasury's Exchange Rate Stabilization Fund.
After the news of US support broke, Argentina's dollar bonds rose sharply in price. The S&P Merval stock index rose 1.5%.
Trump considers Milei a political ally. The Argentine leader governs the country in the populist spirit of MAGA, an ideology promoted by Trump in the US. Milei changed the meaning of the acronym to “Make Argentina Great Again.”
Experts say the main reason Trump is willing to help Milei is Argentina's great geopolitical importance to the Trump administration. Trump has few allies among national leaders in Latin America, while the US's main rival, China, is strengthening its position in the region. In addition, Argentina is rich in natural resources, including oil and gas reserves, uranium, and lithium, which are used in the production of batteries.
Trump currently has a particularly tense relationship with Brazilian President Luiz Inácio Lula da Silva, he is threatening new tariffs on Mexican President Claudia Sheinbaum, and he is ordering strikes on ships belonging to alleged drug traffickers in the Caribbean as a warning to Venezuelan President Nicolás Maduro. During this period, it is particularly important for him to have allies among Latin American leaders.
Trump has taken steps to help Argentina before, but never directly. During his first presidential term in 2018, he persuaded the IMF to approve an initial $50 billion aid package for the country, but the deal quickly fell apart. Since then, the IMF has signed two more agreements with Argentina, including a $20 billion aid package in April 2025.
What are American farmers dissatisfied with?
However, not everyone in the US is happy with Trump's support for Argentina. Experts note that if Milei, who is rapidly losing voter approval, loses the 2027 presidential election, the US may waste money supporting his political course and free market strategy, ultimately failing to gain an ally in the region. In addition, many economists believe that the peso is overvalued. London-based consulting firm Capital Economics estimates the gap at 30%. This means that pressure on the currency is likely to resume.
American farmers are the most dissatisfied. Against the backdrop of news about US financial support, Argentina has abolished export duties on a number of goods, including a 26% duty on soybeans. As a result, China, which has historically been the largest buyer of American soybeans, has doubled its purchases of Argentine soybeans. American farmers told Axios that they have not received a single order for soybeans from China this year, which is negatively affecting their profits.
“It is unfortunate that while the US is helping Argentina stabilize its economy, it is undermining the position of American farmers and weakening President Trump's negotiations with China,” commented US Representative Julie Fodorczak.
