Since his surprise election victory in 2023, Argentina’s right-wing libertarian president Javier Milei has aligned himself closely with Donald Trump and the wider MAGA movement. Now, with President Trump back in the White House, Milei will hope to bring home rewards in the form of increased US trade and investment, just as Argentina reaches a key phase on its journey of economic reform and stabilization. S-RM Americas associate director Felix Cook examines the growth and investment outlook for Argentina as it enters a pivotal year.
In many ways, the election of Javier Milei as President of Argentina in 2023 foreshadowed the return of his friend Donald Trump to the White House. Frustrated by rampant inflation, economic stagnation, and the perceived indifference of the metropolitan establishment to their everyday concerns, Argentine voters turned to a combative conservative outsider as their best alternative. Like Trump, Milei was a pugnacious television host before his pivot to politics, and his governing program was scant on detail. Even La Nación, Argentina’s rock-ribbed conservative newspaper of record, described his victory as a “leap into the void.” Nonetheless, Milei’s first year in office delivered surprising success. His ‘shock treatment’ reforms have jolted signs of life from Argentina’s torpid economy. Inflation has fallen from a dangerous, runaway high of 25 percent in December 2023 to just 2.2 percent in January this year. Market confidence is increasing, and Argentine government bonds have set record highs. Still, given Argentina’s history of economic volatility, this fragile recovery remains vulnerable to shifts in consumer and investor sentiment, as well as external shocks. As Milei hopes to cement Argentina’s gains, he will likely look to his warm relationship with Donald Trump to attract US investment and secure support in key institutions like the IMF. If he does, Argentina may be one of the most attractive markets for Latin American investment in the years ahead.
A friend in Buenos Aires
When Milei was first elected, many commentators described him as a Trump protégé. As well as their shared experience as celebrity outsiders, the two presidents have a similar antipathy for environmentalism, regulation, ‘woke,’ and their respective countries’ political, media, and cultural elite. Even in the doldrums of Trump’s political career following his 2020 loss to Joe Biden, Milei remained a staunch supporter; the kind of committed loyalty that Trump is said to prize. After Trump’s second electoral victory, Milei was his first foreign visitor, and also attended Trump’s inauguration in January. Trump has promised a renewed focus on Latin America in US foreign policy, and staffed his administration with hawks determined to rebuild US hegemony in the region. In this context, Milei is one of the few Latin American leaders who have openly embraced Trump and his wider movement, establishing himself as a star of the US conservative ecosystem. Earlier this month, Milei made a prominent appearance at a popular MAGA conference, where he gifted Elon Musk with a chainsaw in celebration of his DOGE cost-cutting initiative. Not since the days of the Peróns has an Argentine leader enjoyed such celebrity in the US – a development that has also bolstered Milei at home, where confidence in government has risen sharply since Milei came to power.
Aligned interests
For all their personal and political chemistry, Milei and Trump also share economic goals and a transactional view of world affairs. Milei sees it as his mission to remake Argentina’s economy after decades of political instability and mismanagement, culminating in a humiliating 57 billion dollar bailout by the IMF in 2018. Milei is now renegotiating those bailout terms, including new disbursements and an extension of repayments to make room for his free-market reforms to begin delivering robust growth. He has expressed hope that his friendship with Trump will help win pivotal US support for Argentina’s proposals with the IMF. In return, Milei is offering Trump an economic and diplomatic beachhead in South America as the new administration begins its drive to reassert US economic primacy over the continent and counteract Chinese influence. Milei has suggested that Argentina will join Trump’s proposed ‘reciprocal tariff’ accord, and even indicated that Argentina could leave MERCOSUR, the South American trade block, in favor of a free trade agreement with the US. The Trump administration will no doubt seek Argentina’s support against its regional enemies, Cuba, Venezuela, and Nicaragua, as well as greater access to Argentina’s strategic rare minerals, including the world’s third-largest supply of lithium.
Investment opportunities
The potential for a Trump-backed sweetheart deal with the IMF is already seeing some US investors make big bets on Argentina before prices rise. With the IMF predicting economic growth of 5 percent in 2025 and a politically friendly government, many US firms are demonstrating renewed interest in Argentina’s upsides, including abundant natural resources, access to a skilled and relatively low-cost labor force, and a strong and growing domestic consumer market. Milei’s reforms and pro-business posture offer US investors new opportunities and increased ease of business in key sectors, such as energy, agriculture, and rare minerals. In December 2023, shortly after taking office, Milei issued a ‘mega decree’ deregulating the economy by modifying or repealing over 300 existing laws, including preparing state-owned companies for privatization, easing employment laws by extending probationary periods and limiting severance pay, and eliminating various import and export controls. This year, Milei is likely to reach an agreement with the IMF to finally abolish Argentina’s arcane system of currency controls (popularly known as the cepo after an infamous 19th century torture device), which will cut red tape and increasing ease of investment and remittance. Finally, Argentina’s strategic location and membership of MERCOSUR provide access to the broader Latin American market, and could facilitate wider regional expansion by US corporates, particularly if neighboring countries bow to pressure from Trump to increase their own trade with the US.
Conclusion
As Argentina enters a pivotal phase of its economic transformation under Milei, his strong alliance with Donald Trump makes Argentina one of the Latin American countries best-positioned to exploit a renewed US focus on the region and avoid tariffs and other compulsive measures. Milei’s radical free-market reforms have already sparked optimism among investors, with inflation slowing, bond markets rallying, and IMF negotiations underway. If Milei can further leverage his ties to Trump to secure favorable trade deals, US direct investment, and support within key institutions like the IMF, Argentina may emerge as an attractive investment destination for those willing to bet on the country’s turnaround and the continued ascension of the international Trumpian right.
