With the strong bond between Trump and Milei as a backdrop, a trade agreement between the United States and Argentina may be on the horizon. On January 20, Donald J. Trump will assume the presidency of the United States for the second time.
This event is historic: only Grover Cleveland had previously served two non-consecutive presidential terms (1885–1889 and 1893–1897). Trump’s victory was remarkable, not only for the number of votes but also for enabling the Republican Party to win the popular vote while in opposition for the first time since 1980, when Ronald Reagan defeated the incumbent, Jimmy Carter.
For Argentina, Trump’s new administration signifies a phase with more local implications than usual. The relationship between the United States and Argentina is crucial in four major areas.
Key Areas of Bilateral Relations
First, the two nations share significant bilateral trade in goods. The United States is Argentina’s third-largest trading partner, close behind China. In 2024, the United States received $6.8 billion in Argentine exports (7.7% of Argentina’s total exports) and accounted for $7 billion in Argentine imports (10.5% of total imports). Argentina’s exports to the United States mainly consist of minerals, metals, and food industry products, while imports from the United States primarily include chemicals, machinery, equipment, and minerals.
Second, the global economy increasingly emphasizes the importance of trade in services. The United States is the largest destination for Argentina’s service exports, followed by Brazil and Uruguay. In 2023, Argentina’s service exports to the United States amounted to $4.5 billion, representing over 25% of total service exports.
Third, the United States leads Argentina’s foreign direct investment (FDI), focusing on minerals, manufacturing, and communications sectors. The U.S. investments in Argentina are approximately $28 billion, accounting for 19% of all foreign investment.
Fourth, the United States is a critical source of financial decisions and ratings for Argentina, influencing access to global financing.
Opportunities for Strengthening the Relationship Between the United States and Argentina
The intensity of the bilateral relationship could improve significantly. The potential is vast. Argentina ranks among the five countries globally with the lowest share of international trade in its economy and the lowest ratio of foreign investment to GDP in the region. Meanwhile, the United States is the world’s largest importer, the top global investor, the leading financier, and the main voting power in the International Monetary Fund (IMF), holding 16% of votes.
Under Trump’s second administration, Argentina may face various scenarios. On the one hand, the incoming Republican administration is expected to support Argentina in securing a new IMF agreement. Trump’s victory has altered the tone of Argentina’s negotiations with the IMF. On the other hand, the strong personal rapport between Trump and Milei establishes a significant political foundation. This relationship bolsters the Argentine government’s domestic position, enhances the financial world’s perception of Argentina, and improves prospects for real-economy investors.
Geopolitical Implications of Trump-Milei Relations
From a geopolitical standpoint, Trump’s and Milei’s alliance is poised to be influential, especially given the lack of other strong U.S. allies in Latin America. The incoming Secretary of State, Marco Rubio, will be the first Latino (of Cuban heritage) in this role, bringing a heightened sensitivity to regional issues.
A recent World Economic Forum study, Geopolitical Rivalry, and Business reveals that businesses now prioritize geopolitical conditions over other concerns, such as environmental or ESG standards. Similarly, a UNCTAD report shows that in the past two years, global trade grew by 6.2% among geopolitically aligned nations while declining by 5.7% among those with distant relations.
In this context, President Javier Milei has expressed interest in negotiating a Free Trade Agreement (FTA) with the United States, though this ambition faces significant challenges.
Challenges to a Trade Agreement
Formal constraints imposed by Mercosur present a significant hurdle. Holding Mercosur’s pro tempore presidency, Argentina is set to push for this initiative, likely sparking intense debates within the bloc. Furthermore, Trump’s historical stance on trade does not favor open markets, complicating the pursuit of an FTA.
While Trump may advocate for preferential relations favoring allies over adversaries, an intermediate solution might emerge, such as an economic cooperation agreement. This approach could enhance bilateral trade conditions in areas of mutual interest, such as technological services, energy, or minerals.
Potential Risks in the Relation Between the United States and Argentina
Despite opportunities, potential risks remain. Trump has publicly expressed his intent to impose tariffs on imports, which could negatively affect Argentina’s trade with the United States. Such measures could also exacerbate global economic conditions, leading to higher inflation in the U.S., increased interest rates, a stronger dollar, and disruptions to global supply chains.
However, Trump’s unpredictability and his administration’s diverse composition—featuring both proponents of higher tariffs and advocates of freer trade—leave the medium-term policy direction uncertain. Recent reports from The Washington Post suggest that tariff plans may only target critical imports, aligning with analysts’ views that these policies are negotiation tools rather than definitive ideological stances.
At the same time, the Trump administration’s intention to significantly reduce internal regulations and taxes may lower operational costs in the U.S., creating international ripple effects. This shift could present challenges and opportunities for the relationship between the United States and Argentina.
Conclusion: A Complex Yet Promising Bilateral Future
As this new chapter unfolds, the relationship between the United States and Argentina is poised to enter a complex and dynamic phase. While opportunities abound, they come with risks. Success will depend on Argentina’s ability to navigate these complexities, forging a comprehensive and mutually beneficial partnership.