Argentine President Javier Milei, in Washington seeking trade concessions from Trump, has made significant economic reforms, resulting in a budget surplus and decreased inflation. Although he received a warm reception from Trump, achieving a free trade deal appears unlikely. Internal pressures and ongoing negotiations with the IMF could determine Argentina’s economic future amid new U.S. tariffs.
Javier Milei, the Argentine president who took office in December 2023, sought favorable trade terms during his February visit to Washington as U.S. tariffs threatened Argentina’s economy. In struggling with recession and inflation, Milei implemented significant austerity measures, reducing the government workforce by 10% and streamlining ministries from 19 to eight. His efforts resulted in Argentina’s first budget surplus since 2011 and improved economic optimism, with the World Bank projecting 5% GDP growth for the year.
Annual inflation decreased from nearly 300% to under 100%—its lowest in five years—due to measures such as the gradual depreciation of the peso and incentives for foreign investments. These changes turned a substantial trade deficit into a record surplus, while poverty rates dropped from a peak of 53% to below 40%. Early results of Milei’s presidency have received international acclaim, bolstering his approval ratings.
Previously, Trump expressed a favorable view of Milei, referring to him as his “favorite president” and welcoming him at significant events. However, Milei’s aspirations for a U.S.-Argentina free trade deal face challenges in light of the extensive consultations and congressional votes required. Experts predict that a much narrower deal or exemption from tariffs may be a more realistic outcome instead of a full free trade agreement.
Despite securing limited time with Trump and inviting further discussions, Milei did not obtain immediate trade concessions during his Washington trip. The dynamics appear promising, with Trump having praised Milei and signaling potential openness regarding trade with Argentina. Talks for an International Monetary Fund (IMF) loan program are reportedly nearing completion, which could further alleviate Argentina’s economic issues.
Milei’s popularity is tempered by ongoing socio-economic struggles, as pernicious inflation, unemployment, and diminished social spending affect daily life in Argentina. Gauging public sentiment, residents of Buenos Aires are vocalizing their frustrations over cuts to essential services. Furthermore, Milei faces scrutiny and allegations of fraud surrounding his promotion of a depreciated cryptocurrency venture, as well as concerns regarding judicial independence due to recent appointments of Supreme Court justices.
In an effort to align more closely with Trump, Milei has adopted anti-woke rhetoric, announced withdrawals from international treaties, and echoed specific policy changes supported by the U.S. leader, including banning gender-affirming care for minors. However, as the U.S. is Argentina’s third-largest export market, future tariffs could undermine economic gains achieved under Milei.
With tariffs recently imposed on all steel and aluminum imports, the economic relationship’s status hangs in balance. Under previous administrations, Argentina benefited from tariff exemptions, indicating possible paths for Milei to navigate the current U.S. policies while courting Trump’s support.
Argentina, under President Javier Milei, has experienced significant economic shifts and seeks strengthened ties with the U.S. amidst looming tariffs. While Milei has made commendable progress in reforming the economy, his diplomatic charm may not immediately yield trade benefits with Trump. The outcomes depend heavily on trade negotiations and international economic dynamics, particularly with ongoing pressure from tariffs and internal socio-economic challenges. The potential IMF loan and U.S. exemptions could provide a lifeline for Argentina’s stability, but the threshold for achieving sustained support remains uncertain.
Original Source: foreignpolicy.com
