Buenos Aires, Argentina — Javier Milei and Donald Trump seem to love each other. At least, they’ve stated as much. “I love him because he loves Trump,” said the current U.S. president on the campaign trail. Back in 2023, the president of Argentina took a few pages from the Trump playbook to reach the Casa Rosada as an outsider. Now, Trump is even taking a page from Milei’s book, launching the Department of Government Efficiency (DOGE), which the president debuted in Argentina last year.
Their bromance goes further. The libertarian supported the Republican’s candidacy and was one of the select foreign leaders invited to Trump’s inauguration. The rapport includes extensive alignment with U.S. foreign policy, including most votes in the United Nations — a stark contrast to previous Argentine administrations. Milei also expects support from Trump for his economic plan, especially in key negotiations with the International Monetary Fund (IMF), which is headquartered in Washington, D.C.
But will Trump’s economic vision actually benefit Argentina and everyday Argentines?
Heading into 2025, the libertarian faces multiple challenges. He aims to end inflation and lower prices while avoiding a recession and a surge in unemployment. Milei also needs to amass enough dollars to pay back foreign debt while keeping the exchange rate tied to a strong U.S. dollar — a policy that has strengthened the Argentine peso but kept prices for common goods high.
Milei has made surprising advances in Argentina’s economy in 2024, lowering triple-digit inflation and ending a double-digit deficit while leading a minority in Congress. The Argentine president has still faced widespread criticism for the extent of the budget cuts, which have hit pension recipients and public sector workers the hardest.
His government must also negotiate a new agreement with the IMF, ideally one that includes fresh cash flow to replenish depleted treasury reserves. Milei is also expected to lift monetary restrictions — known as the “cepo,” or clamp, on dollar exchanges — while avoiding a devaluation that could reignite inflation.
And he hopes to achieve all of this while winning October’s midterm elections, as a defeat could jeopardize his entire program.
Trump’s support is crucial to achieving these goals. Negotiations between Argentina and the IMF have accelerated in recent weeks, thanks in part to American influence. An agreement is expected in the first quarter of 2025, but decisions regarding Milei’s future economic program — particularly the end of the “cepo” — may have to wait until after October’s elections.
“We don’t yet know if there will be new cash from the IMF or whether we’ll have an agreement to get through the electoral year and then wait for decisions after the elections,” Amilcar Collante, an economist from La Plata National University, told Argentina Reports. He doubts an eventual agreement will include “fresh money” or, more likely, if it will be “an agreement for the electoral year, subject to review after the elections.”
“An agreement is easier with Trump, it will accelerate negotiations. I don’t foresee a large loan; $20 billion is the figure being mentioned. I’d like to see the requirements. The IMF always asks for something,” explained Collante.
Milei’s program includes a fixed 1% monthly increase in the exchange rate, known as a “crawling peg,” and interventions in the alternative dollar markets. Collante believes an agreement with the IMF would likely require abandoning such practices. “I think the government will stick to its program,” he said.
The danger of Trumponomics
President Trump might love to help Milei, but it remains unclear whether his program will benefit Argentina, whose economy relies heavily on agricultural and energy exports. Escalating trade wars between the United States and China could harm Argentina, which sells a significant portion of its grains to Asia. Additionally, a strengthening U.S. dollar could leave the Argentine peso with uncompetitive export prices and higher living costs at home.
“Trump will probably threaten more tariffs than he will ultimately impose,” said Collante. “With OPEC, he’ll try to sell more American oil, and he’ll threaten China with tariffs to negotiate on other issues.”
Unconventional oil extraction and rising exports could help contain inflation, and “that would give [Federal Reserve Chairman] Jerome Powell more room for a lax monetary policy and to lower the Fed’s rate further than what the market expects,” Collante added. As a result, the dollar wouldn’t strengthen further, which would benefit Argentina.
Milei will have to wait to see what Trump’s economic program entails. “It might appreciate the U.S. dollar if it increases the fiscal deficit and the Fed can’t lower its rate; that can complicate things for Argentina,” said Collante.
“Argentina’s strategy with a 1% monthly crawling peg and inflation above that rate will continue to strengthen its currency. It’s a scheme that can only be short-lived — you can’t extend it forever. The target is reaching October’s elections,” explained Collante.
The economist doubts the trade war will escalate to a damaging point, as the conflict is already priced in. “China is growing less, and a big tariff would affect the yuan. It’s doubtful the tariffs will become more of a policy than a negotiating tactic. It could affect the U.S. as well. If you want to slash inflation but add tariffs to your own imports, prices will rise. At that point, you’re playing with actual U.S. growth,” the economist concluded.
