Is Donald Trump good for Argentina?

With Argentina’s government announcing the imminent agreement with the International Monetary Fund – with the support of Donald Trump and the United States, the Fund’s biggest shareholder – and amid speculation of additional backing from the US Treasury, more than ever it is worth asking if the US President’s second presidential term is positive, neutral or negative for Argentina. It is a question also being asked by the United States itself, Europe, Russia and China.

While Trump says that he is willing to analyse a free-trade agreement with Argentina, he is slapping tariffs on the products of Canada and Mexico, countries with which the United States has had free-trade agreements since 1988 (the former) and 1994 (the latter). Again, it is worth asking that if he does that with neighbouring countries – with whom free-trade agreements are virtually a geographic imperative, destroying over three decades with the application of tariffs – how much predictability could one with Argentina have?. Added to the underlying debate as to the convenience of a treaty which in the past was pursued with interest by the United States with the epilogue of its rejection by the South American countries at the 2005 Summit of the Americas in Mar del Plata, while – since 2019 – Mercosur still has pending after 20 years of negotiations the final approval of its treaty with the European Union, with whom there would be a more complementary relationship.

To simplify the comparison, the advantages for Argentina from an EU treaty would be for farming, energy and mining, whereas a US treaty would be beneficial just for mining. In both cases it would threaten various industrial sectors while advantageous for investments to improve their competitiveness.

When, at the last Conservative Political Action Conference (CPAC) in the United States, Trump publicly told Milei: “I’m proud of you,” was this praise or a degradation of the presidential figure by treating him as a subordinate? Was it inversely similar to the mistreatment of Ukraine’s Volodomyr Zelenskyy, another subordinate who did not understand his place in the world?

In the short term, the question is whether Trump’s specific financial support for Argentina’s government will create more, less or the same benefits as the general financial turbulences produced worldwide by his tariffs, the chaos in international trade, the fall in commodity prices, the volatility on financial markets, the risk of increased inflation and interest rates, plus the devaluation of all emerging countries overvaluing the peso yet further. All of which is summed by the latest cover of The Economist magazine, showing Trump standing on a mountain of dollar banknotes and an oilcan setting fire to the world economy.

Trump’s new transactional and short-term economic order overlaps with a new gangster-style and hyper-materialistic political order (the previous cover of The Economist). When he demands that Ukraine compensate with natural resources the cost of the armaments delivered by the United States to defend themselves from the Russian invasion, he is blending both tools into one, making money and weaponry mutually interchangeable.

A country’s firepower for war is the product of saving from the consumption of its inhabitants for the purpose of military investment. That investment has been progressively descending from six percent of global economic output in the 1960s to the current 2.5 percent. But while the United States invests 3.4 percent of GDP in military power, the European Union only invests half that or 1.7 percent (the same as China) with even less invested in defence in Latin America – just one percent with Argentina half that again at 0.5 percent. At the other extreme, Russia invests 5.9 percent of its GDP in military power.

Polish Prime Minister Donald Tusk, whose country invests 3.8 percent of its GDP in defence, more than double the European average, said: “It’s absurd that 500 million Europeans ask 300 million US citizens to defend them from 140 million Russians.”

The Russians are clearly inclined to consume less than the Europeans while the current Russian military power is the result of even less being consumed in the decades of Soviet governments. Ditto for the Chinese, who have accepted consuming less in recent decades, transforming those savings into investments which fed back into higher growth.

But the worrying thing about a world order where the balance of the power to wage war substitutes for the international norms since World War II prohibiting any territorial expansionism, the cause of the two world wars, revives the idea of a possible third, as Trump told Zelenskyy, dumping on the Ukrainian leader the responsibility of having the capacity to trigger it.

If the United States abandons the military tutelage which it has exercised over Europe since the end of World War II, it might also trigger a renaissance of not only European autonomy but also its recovery as a world power. In that case a free trade-agreement with Mercosur would make more sense for a European Union disconnected from the United States. And that leaves China.

The Greek military historian Thucydides wrote in his History of the Peloponnesian War that “it was the rise of Athens and the fear this instilled in Sparta which made the war inevitable,” a quotation which is used to project a future war between the United States and China. Thucydides also wrote: “The strong do what they can and the weak suffer what they must.”