This week, Treasury Secretary Scott Bessent made it clear that if New York City, under mayoral candidate Zohran Mamdani, ever sought a federal bailout, the Trump administration’s response would be a swift and blunt refusal.
His exact words on Fox Business? “Drop dead.”
Argentina, however, presents a starkly different scenario. Despite its struggling economy, the U.S. Treasury Department, led by Bessent, announced on Wednesday a readiness to provide a substantial $20 billion financial lifeline to the South American nation.
This generous offer is designed to bolster the standing of Argentina’s embattled President, Javier Milei, a figure President Trump evidently views as a close political ally.
With this move, the Trump administration is venturing deep into the controversial territory of international bailouts, a concept traditionally met with strong opposition from Republicans. This strategic deployment of American economic influence aims to sway another country’s electoral landscape, intertwining the U.S. with Argentina’s financial destiny—a nation historically burdened by relentless inflation and crippling debt.
Unsurprisingly, this decision has drawn sharp criticism from American agriculture groups. Many of their members, already struggling due to Mr. Trump’s ongoing trade war with China, are still awaiting their own much-needed economic relief.
Following Mr. Trump’s tariffs on Chinese imports, China ceased purchasing American agricultural products like soybeans. Consequently, China shifted its orders to Brazil and Argentina, where soybeans are now more competitively priced due to China’s retaliatory tariffs. This shift has ignited fears of an impending farm crisis across rural America.
The American Soybean Association, actively campaigning for farmer support, described the current sentiment as “overwhelming frustration.” They highlighted Argentina’s recent move to lower export taxes, enabling it to sell even more soybeans to China. This development further disadvantages U.S. farmers, who continue to grapple with hefty Chinese tariffs.
Caleb Ragland, president of the American Soybean Association, expressed the farmers’ dismay: “U.S. soybean prices are falling; harvest is underway; and farmers read headlines not about securing a trade agreement with China, but that the U.S. government is extending $20 billion in economic support to Argentina.”
For agriculturalists like Mr. Ragland, this bailout for Argentina feels profoundly unjust, especially as it directly undermines American soybean exports.
On Thursday, Mr. Trump stated his intention to reallocate some of the tariff revenues collected by the government directly to American farmers, promising to “make sure our farmers are in great shape.”
Leading Democrats have also condemned the Argentina bailout, accusing Mr. Trump of cronyism and preferential treatment.
In a letter to Mr. Bessent, Senator Elizabeth Warren of Massachusetts, the ranking Democrat on the Senate Banking Committee, voiced her “deeply troubling” concerns: “At a time when Americans are struggling to afford groceries, rent, credit card bills, and other debt payments—and with the administration gutting funds that make health care affordable for tens of millions of people here at home—it is deeply troubling that the president intends to use significant emergency funds to inflate the value of a foreign government’s currency and bolster its financial markets.”
Argentina’s economy has grappled with persistent crises for decades. Recent weeks have seen the peso’s value plummet amid growing doubts about President Milei’s government stability. Just last week, the central bank injected over $1 billion to stabilize the currency, aiming to maintain its exchange rate with the dollar below the threshold established in a prior $20 billion agreement with the International Monetary Fund.
This U.S. intervention aims to re-establish confidence in Argentina’s economy and strengthen President Milei’s position, especially after his party suffered significant losses in a recent local election and with crucial legislative elections on the horizon next month. President Trump, who admires Milei’s self-proclaimed radical libertarian ideology, has openly called him his “favorite president.” Notably, Mr. Milei was one of only two world leaders present on stage at Mr. Trump’s inauguration.
The precise details of this financial assistance are still being ironed out by Mr. Bessent and his Argentine counterparts. However, analysts are already flagging it as a potentially high-risk venture for American taxpayers.
Monica de Bolle, a senior fellow at the Peterson Institute for International Economics, noted that the sheer scale of the bailout has “raised eyebrows.” Adding to the unusual nature of the deal is the apparent lack of typical conditions, such as spending cuts or foreign exchange policy reforms, which are standard practice for loans from organizations like the International Monetary Fund.
“The U.S. is getting itself into something that they have no exit strategy for,” she warned.
Argentina’s past is riddled with a poor record of debt repayment, marked by multiple defaults that have resulted in substantial losses for investors. As a nation frequently defaulting on its obligations, it has repeatedly sought assistance from the International Monetary Fund, making it both the IMF’s most frequent bailout recipient and its largest debtor.
Eswar Prasad, a Cornell University professor and former senior IMF official, commented, “It’s hard to make a strong economic case at the moment for offering the sort of unconditional support that the Trump administration seems to be envisioning for Argentina.” He added, “What is even more striking is that the Trump administration seems willing to put American money at risk in the bailout it is considering for Argentina.”
While many investors anticipate that the U.S. bailout might temporarily stabilize Argentina’s financial markets and halt the currency’s decline, most view it as a short-term solution. This raises concerns that U.S. investments could be jeopardized if Argentina’s economic woes persist.
Brad Setser, a senior fellow at the Council on Foreign Relations, drew parallels between this loan and the $20 billion provided by the U.S. to Mexico in 1995. He emphasized that Argentina’s chronic inability to repay its debts significantly amplifies the risks associated with this new lifeline.
“You’re throwing money at a country that essentially has exhausted its ability to borrow from the I.M.F.,” Mr. Setser observed.
President Trump isn’t the first to encounter scrutiny over extending foreign government loans. President Bill Clinton faced considerable political backlash for the 1995 Mexican bailout. However, Clinton was ultimately vindicated when Mexico, having collateralized its oil exports, successfully repaid its foreign lenders and stabilized its collapsing peso.
Lawrence H. Summers, former Treasury Secretary under President Clinton, highlighted that Argentina’s strategic importance to the U.S. is not as clear-cut as Mexico’s. He questioned the Trump administration’s true objectives in propping up Argentina’s economy.
“This is very different from Mexico,” Mr. Summers asserted. “There’s no 2,000-mile border, no major systemic risk, and Argentina has pre-existing debts, including to the I.M.F.”
Mr. Bessent, however, defended the support for Argentina, citing its significant reserves of critical resources like lithium and its ongoing efforts toward what he considers vital fiscal reforms. He countered that the very policies championed by critics like Senator Warren were, in his view, responsible for Argentina’s current economic struggles.
On social media, Mr. Bessent sarcastically remarked, “Few should be surprised by Senator Warren’s self-pitying rendition of ‘Don’t Cry for Me Massachusetts.’” He further claimed, “The destructive economic policies she has championed since joining the Senate in 2013 rival the failed leftist agenda of the Argentine opposition.”