In his second Inaugural Address, back in January, Donald Trump couldn’t have stated his intentions more clearly: “During every single day of the Trump Administration, I will, very simply, put America first.” But last week, when Trump met with Javier Milei, the President of Argentina, to discuss the twenty-billion-dollar financial package that the Treasury Department has proposed to stabilize the Argentinian peso, the President sounded a different tune. Milei, a Trump ally and far-right conservative who is dedicated to slashing government programs and making a bonfire of regulations, has staked a great deal on maintaining the value of his country’s currency. “Just helping a great philosophy take over a great country,” Trump said. “Argentina is one of the most beautiful countries that I’ve ever seen, and we want to see it succeed, very simple.”
The following day, the Treasury Secretary, Scott Bessent, doubled down on the Administration’s commitment to Argentina, which, pretty as it is, is also heavily indebted, perennially troubled, and not a major trading partner of the United States. (Last year, the U.S. exported $16.5 billion worth of goods and services to Argentina, compared with $384.4 billion to Mexico, and $78.7 billion to Brazil, Argentina’s neighbor.) At a press conference last Wednesday, Bessent said he was working on another twenty-billion-dollar support package, this one financed by banks and investment funds rather than the U.S. taxpayer.
Milei, who was elected in November, 2023, cuts a dramatic figure in Latin American politics. Like Jair Bolsonaro, the former President of Brazil, he rose to power by presenting himself as a brash, anti-establishment populist. Although he is sometimes compared to Trump, Milei identifies himself more as a free-market economist of the Austrian school, committed to free trade, unfettered markets, and dismantling the government. (He has described himself as an “anarcho capitalist.”) To some American conservatives, he is an inspirational figure.
During his first year in office, Milei introduced economic “shock therapy,” slashing government spending by about thirty per cent, partly by cutting pensions and reducing the wages of public employees. These ultra-austerity policies helped Argentina to post a budget surplus in 2024 for the first time in fourteen years. The inflation rate has dropped from roughly a hundred and sixty per cent to under fifty per cent. In February, Milei appeared in Maryland at CPAC, the annual conservative jamboree, where he presented a chainsaw to Elon Musk. In April, the International Monetary Fund, which for decades has promoted versions of the austerity and deregulation policies that Milei adopted, rewarded Argentina with a new loan of twenty billion dollars. One sympathetic commentator hailed “Milei’s Economic Miracle.”
Any hopes that the new I.M.F. loan might bring to an end Argentina’s need for external support were soon dashed. Milei’s spending cuts imposed heavy costs on pensioners, public-sector workers, and others who relied on the state. He promised that his harsh policies would unleash a wave of investment and expansion, but, in the first half of this year, the country’s nascent economic recovery stalled. Unemployment started climbing again. Businesses also suffered, and Milei’s popularity declined. At the start of September, after his party lost a local election in Buenos Aires province, traders dumped the peso, which the government had pegged to the dollar to restrain inflation. (When the value of a currency falls, imports get more expensive, which pushes up over-all prices.) Until the Trump Administration came to the rescue, Milei was facing the prospect of a currency crisis of the sort that Argentina has experienced many times before.