Treasury Secretary Scott Bessent recently stated that if New York City, under mayoral candidate Zohran Mamdani, ever sought a federal bailout, the Trump administration’s response would be a succinct “Drop dead.” However, Argentina’s situation presents a stark contrast.
The Treasury Department has been actively working to stabilize Argentina’s faltering economy, culminating in Mr. Bessent’s Wednesday announcement that the United States is prepared to offer a substantial $20 billion lifeline.
These actions are largely intended to support Javier Milei, Argentina’s embattled president, whom President Trump views as a kindred political spirit.
By extending economic aid to Argentina, the Trump administration is venturing into the sensitive realm of bailouts, a practice typically opposed by Republicans. Furthermore, by leveraging America’s economic influence to affect another nation’s elections, the president is closely intertwining the United States with the financial stability of Argentina, a country long plagued by severe inflation and mounting debt.
This initiative has drawn criticism from American agriculture groups, whose members have suffered due to Mr. Trump’s trade dispute with China and are themselves awaiting economic assistance.
Following Mr. Trump’s decision to impose tariffs on Chinese imports, China ceased purchasing American agricultural products, including soybeans. Consequently, China has shifted its soybean purchases to Brazil and Argentina, where U.S. retaliatory tariffs have made their products more affordable, sparking widespread concerns about an impending farm crisis across rural America.
The American Soybean Association, which has been advocating for financial relief for farmers, expressed overwhelming frustration. The organization highlighted that Argentina recently lowered its export taxes, enabling it to sell even more soybeans to China and further disadvantage U.S. farmers burdened by high Chinese tariffs.
“U.S. soybean prices are plummeting; harvest is in full swing; and farmers are hearing news not of a trade agreement with China, but of the U.S. government extending $20 billion in economic aid to Argentina,” remarked Caleb Ragland, president of the American Soybean Association.
For farmers like Mr. Ragland, this bailout for Argentina, a country actively undermining American soybean exports, seems profoundly unjust.
On Thursday, Mr. Trump indicated his intention to reallocate some of the government’s tariff revenues to “give it to our farmers” to “make sure our farmers are in great shape.”
Leading Democrats have also condemned the Argentina bailout, accusing Mr. Trump of cronyism.
“At a time when American families are grappling with rising costs for groceries, rent, and credit card debt—and while this administration cuts funding for affordable healthcare for millions at home—it is deeply concerning that the president plans to use significant emergency funds to boost a foreign government’s currency and financial markets,” stated Senator Elizabeth Warren of Massachusetts, the ranking Democrat on the Senate Banking Committee, in a letter to Mr. Bessent.
Argentina’s economy has endured decades of instability. The value of its currency, the peso, has recently declined amidst worries about President Milei’s political standing. Last week, Argentina’s central bank expended over $1 billion to bolster the peso and maintain its exchange rate against the dollar below the cap established earlier this year in a $20 billion agreement with the International Monetary Fund.
The U.S. support aims to restore confidence in Argentina’s economy and strengthen President Milei’s position after his party’s poor performance in a recent local election and ahead of crucial legislative elections next month. Mr. Trump, who sees Mr. Milei as a political kindred spirit and a “radical libertarian,” even called him his “favorite president.” Notably, Mr. Milei was one of only two world leaders present on stage at Mr. Trump’s inauguration.
The exact details of the support, which Mr. Bessent is still negotiating with his Argentine counterparts, remain undefined, raising concerns among analysts about potential risks to American taxpayers.
The sheer scale of the bailout “raised eyebrows,” noted Monica de Bolle, a senior fellow at the Peterson Institute for International Economics. The arrangement is particularly unusual because, at present, it lacks the typical conditions seen in loans from institutions like the I.M.F., such as spending cuts or foreign exchange policy adjustments.
“The U.S. is entering into a situation for which they have no clear exit strategy,” she added.
Argentina has a troubled history of debt repayment, marked by multiple defaults that have resulted in substantial losses for investors. As a recurring defaulter, the country has frequently sought assistance from the I.M.F., making it both the fund’s most frequent recipient of bailouts and its largest debtor.
“It is difficult to justify a strong economic argument right now for offering the kind of unconditional support the Trump administration appears to be considering for Argentina,” commented Eswar Prasad, a Cornell University professor and former senior I.M.F. official. “What’s even more striking is the Trump administration’s apparent willingness to expose American funds to risk through this potential bailout for Argentina.”
Many investors anticipate that the U.S. bailout will help stabilize Argentina’s financial markets and halt the currency’s depreciation, but they generally view it as a temporary solution. This implies that any U.S. investments could be jeopardized if Argentina’s economic situation continues to worsen.
Brad Setser, a senior fellow at the Council on Foreign Relations, drew parallels between this loan to Argentina and the $20 billion the United States provided to Mexico in 1995. He stressed that Argentina’s history of defaulting on its debts makes this particular lifeline inherently riskier.
“You are essentially throwing money at a country that has exhausted its capacity to borrow from the I.M.F.,” Mr. Setser observed.
Mr. Trump is not the first president to face scrutiny over extending loans to a foreign government. President Bill Clinton encountered political backlash for the 1995 Mexican bailout. However, Clinton was ultimately vindicated when Mexico, having pledged its oil exports as collateral, repaid foreign lenders, and the peso’s collapse was averted.
Lawrence H. Summers, who served as Treasury secretary under Mr. Clinton, remarked that Argentina’s strategic importance to the United States is less apparent than Mexico’s, and the Trump administration’s ultimate goals in propping up its economy remain unclear.
“This is fundamentally different from Mexico,” Mr. Summers stated. “There’s no 2,000-mile border, no major systemic risk, and Argentina already carries significant debts, including to the I.M.F.”
Mr. Bessent defended the support for Argentina, highlighting its substantial reserves of critical resources like lithium and its ongoing fiscal reforms, which he believes are essential. He contended that the economic difficulties in Argentina were a result of policies advocated by lawmakers such as Ms. Warren.
“No one should be surprised by Senator Warren’s self-pitying rendition of ‘Don’t Cry for Me Massachusetts,'” Mr. Bessent wrote on social media. “The damaging economic policies she has promoted since joining the Senate in 2013 are comparable to the failed leftist agenda of the Argentine opposition.”