When he arrived in Washington in late February with troubling U.S. tariffs looming, Argentine President Javier Milei seemed to be in good position to gain favorable trade terms from U.S. President Donald Trump.
Milei had taken office in December 2023 as Argentina struggled with recession and rising inflation, and he promptly followed through on his vow to shrink the government. He reduced the federal workforce by 10 percent, eliminating nearly 40,000 posts, and cut the number of ministries from 19 to eight. Within a year, he had brought about Argentina’s first budget surplus since January 2011 and strong approval ratings, plus a surge of hope about the economy.
From a peak of nearly 300 percent, annual inflation is now under 100 percent, its lowest in nearly five years, thanks in part to Milei’s gradual depreciation of the peso. Under a new initiative to boost foreign investment, Milei turned a sizable trade deficit into a record surplus of nearly $19 billion. Even poverty—which last year approached 53 percent, the highest figure in two decades—is back under 40 percent, according to two recent reports.
Add it all up, and it’s no surprise that the World Bank foresees 5 percent GDP growth through the end of the year.
Even before this economic upturn, Trump World held Milei in high regard. In early 2024, he delivered a speech at the right-wing Conservative Political Action Conference (CPAC) near Washington, D.C. Months later, after Trump won reelection, he called Milei his “favorite president” before hosting him at both his Mar-a-Lago resort and his inauguration.
All of this may have led Milei to expect special treatment from Trump. Speaking at this year’s CPAC in February, the Argentine leader restated his desire for a U.S.-Argentina free trade deal. That’s unlikely anytime soon, according to trade analysts, though a special Argentine exemption could be in the cards.
“A true free trade agreement requires extensive consultation and ultimately a congressional vote, so most tend to take years,” said Brad Setser, a senior fellow at the Council on Foreign Relations who worked in the Obama White House. “Realistically, the near-term prospects are over a much narrower deal, one where Argentina is largely exempted from the increase in tariffs.”
Milei did secure a brief sit-down with Trump while in Washington—as well as a White House invite for the near future—but he earned no trade favors.
“There is a strong relationship developing between the Argentine leader and Trump, but the question is what might that produce for Argentina,” said Benjamin Gedan, the director of the Latin America program at the Wilson Center.
We don’t yet have an answer, but that may soon change. In early March, Trump again praised Milei and expressed a willingness to consider all trade options with Argentina. In addition, talks for a new International Monetary Fund (IMF) loan program for Argentina appear to be in the final stages, potentially enabling Argentina to relax its off-putting currency controls after its next midterm elections, scheduled for October.
IMF chief Kristalina Georgieva has praised Argentina’s “remarkable transformation,” and after meeting Milei in February, she noted the two sides’ progress toward a new loan, which could be as high as $20 billion.
A new IMF loan and a U.S. trade exemption could put Argentina on the path to economic stability. Despite the recent positive momentum, many remain on edge in a country with a history of economic turbulence. With unemployment up, wages stagnating, and many food kitchens shuttered, porteños—residents of Argentina’s capital—have been gathering in Buenos Aires’s vast Plaza de Mayo to express frustration with sharply reduced social expenditures.
Milei is also facing a fraud probe for his promotion of a cryptocurrency “meme coin”—which lost nearly all its value in a few hours—as well as charges of undermining judicial independence after late February appointments of Supreme Court justices by presidential decree.
Seemingly in need of a political boost ahead of elections in October, Milei has appeared to parrot his U.S. counterpart in recent weeks in an attempt to curry favor. In his speech at the World Economic Forum in Davos, Switzerland, Milei denounced Trump’s pet peeve, “wokeism.” He pulled Argentina out of the World Health Organization and is said to be mulling leaving the Paris climate deal, both moves also made by Trump. And he promoted that short-lived crypto meme coin, echoing the U.S. president’s $TRUMP. After Trump barred transgender women and girls from playing on women’s sports teams, Milei banned gender-affirming care for minors.
If this campaign falls short, U.S. tariffs could put an end to Milei’s precarious economic momentum. The United States is Argentina’s third-largest export market, after Brazil and China, and the top export destination for Argentinian aluminum. Aluar, one of South America’s top producers, sent some 40 percent of its exports to the United States last year, worth $530 million.
In its statement on new 25 percent tariffs on all steel and aluminum imports to the United States, which went into effect on March 12, the White House said that Argentina lacks data transparency and exports steel to the United States “at unsustainable quantities.”
Then there’s reciprocation, or Trump’s plan to match any import duties other countries apply to U.S. goods. In Latin America, only Venezuela is more protectionist than Argentina, which places an average tax of 13.5 percent on imported goods, compared to the United States’ average of 3.5 percent.
Trump set a precedent for Argentina trade favors during his first term. In May 2018, after weeks of talks, Trump agreed to exempt Argentina from his steel and aluminum tariffs. Many credited then-President Mauricio Macri’s ties to Trump for that quota deal—and for the IMF’s largest-ever loan, $57 billion, approved that year.
If this Trump administration were to grant a similar exemption, it would align with its growing trade war with China. A handful of Latin American countries—including Nicaragua, Honduras, and most recently Colombia—have seemed to lean toward China in recent years, increasing trade and altering their positions on key issues, such as recognition of Taiwan.
Argentina has hinted at a similar shift. After vowing to end trade with China and rejecting membership in the BRICS bloc upon taking office, Milei has altered his stance.
Last June, Argentina renewed a $5 billion currency swap with China. A few months later, Milei described China as a “very interesting trade partner.” In addition to large lithium investments, Beijing-backed projects in Argentina include a port terminal and power plant in Tierra del Fuego, an $8.3 billion nuclear power plant, and light-rail trains linked to the Bridge and Road Initiative. A new shipyard and port investment in Santa Cruz province may be next.
Writing in Americas Quarterly last month, Brenda Estefan—a professor at Mexico City’s IPADE Business School—described Brazil as “largely a lost cause for Washington, as it has significantly deepened its ties with Beijing.” The White House would presumably prefer not to lose South America’s second-largest economy as well.
Given their burgeoning friendship, Milei seems likely to offer Trump a carrot. The U.S. president has, in the past, sought to build a Trump tower in Buenos Aires—which could be one area of discussion. With U.S. tariffs on Canada and Mexico, as well as China, coming into effect, Argentina might offer to step into the product void, including by offering meat, grain, and oil. Some 60 percent of U.S. oil imports come from Canada, while oil output at Argentina’s vast Vaca Muerta reserves has quadrupled over the past five years.
Lithium, a key raw material for the batteries used in laptops and electric vehicles, is another area of potential cooperation. With global demand set to increase thirtyfold from 2021 to 2040, lithium extraction is booming in Argentina, with the government targeting a fivefold leap in output by 2027 to reach a rank of second in global production. One foreign firm with a sizable investment is China’s Ganfeng Lithium, which supplies Tesla.
Elon Musk—the Tesla CEO and the head of the newly created U.S. Department of Government Efficiency, has called Milei a “model for the rest of the world” and described his cuts to legislation and regulation as “awesome.”
While at CPAC last month, Milei gifted Musk a gilded chainsaw, a reference to the duo’s shared approach to government spending.
Washington has been working to wean itself from Chinese lithium. Under the Biden administration last year, Argentina and the United States agreed to deepen cooperation on key minerals, including lithium. And after taking office, Milei said Musk and U.S. companies were “extremely interested” in Argentina’s lithium. Last month, his government lifted tariffs on imported electric vehicles.
Still, Milei may have hit on his surest route to tariff evasion in his CPAC speech, when he offered Argentina as the first country to join Trump’s reciprocal trade plan.
“What Milei is saying to the U.S. is, ‘If I reduce my tariffs, I assume you will reduce your tariffs,’” said Marcelo Elizondo, an Argentine trade analyst. “Now that Argentina has a more stable economy, this kind of arrangement with the U.S. is possible, maybe even likely. Trump would like to show he has an ally in Latin America.”
One hurdle could be Mercosur, the South American common market in which full members—Argentina, Brazil, Paraguay, Uruguay, and Bolivia—are committed to aligned tariff policies. Argentina would only be able to match proposed U.S. tariff reductions if it were to gain a Mercosur waiver or exception.
But if Mercosur were to turn him down, the Argentine president has acknowledged that he would have one more card to play to win U.S. trade favors.
“Milei is very committed to this goal,” Elizondo added. “He will do anything to get it done, including even leaving Mercosur.”
The post Will Milei’s Charm Offensive Work on Trump? appeared first on Foreign Policy.
