After Argentina’s Midterms, a New Chapter for U.S.-Argentina Relations

On October 26, Argentina’s midterm elections delivered a much-needed victory for President Javier Milei. His party, La Libertad Avanza (LLA), managed to secure roughly 41 percent of the vote against the Peronist opposition’s 32 percent, and while LLA and its allies remain short of a majority in either house of Argentina’s legislature, their share of representation grew significantly. At stake in the election was the necessary congressional backing to carry Milei’s economic policies to completion, which have already slashed previously rampant inflation and could end decades of economic crises.

Argentina’s midterms may also herald a new era of U.S. relations with the country and Latin America as a whole. In the weeks leading up to the election, the United States announced a major financial assistance package, giving Argentina access to a total of $40 billion in U.S. dollar currency swaps, with $20 billion coming from the U.S. Department of the Treasury’s Exchange Stabilization Fund, and a further $20 billion from banks and sovereign wealth funds. In addition to this, the Trump administration announced plans to purchase Argentine beef, a move that was deeply unpopular with U.S. ranchers but offered a powerful signal of the importance Washington places on its relationship with Buenos Aires.

These moves represented a lifeline to the embattled Milei, whose popularity heading into the midterms had been tarnished by a corruption scandal involving his senior adviser (and sister), as well as growing public dissatisfaction with two years of austerity. Flagging enthusiasm about the president’s ability to pull through a midterm win, in turn, dampened investor confidence and worsened the economic outlook. The United States’ willingness to bet big on Argentina in this way helped resurrect Argentina from what may have been a self-fulfilling prophecy. For now, it seems that the bet has paid off. However, there remains much work to be done in bolstering the U.S.-Argentina relationship, both in terms of resolving still-simmering issues around soy exports to China and seizing new opportunities in the critical minerals and defense sectors. More broadly, what occurred in Argentina may indicate a paradigm shift in U.S.–Latin America relations as a whole.

An Economic Monroe Doctrine

From a purely economic standpoint, the United States’ deal with Argentina seemed perplexing. Despite being the third-largest economy in Latin America, Argentina is not a particularly relevant economic partner for the United States, with total goods and services traded between the two countries amounting to just $26.1 billion in 2024. Indeed, Argentina is actually a competitor to the United States in the agricultural sector, a factor which the ongoing U.S.-China trade dispute has put into stark relief. Chinese soybean imports from the United States have plummeted this year, hitting zero for September. South America’s agricultural powerhouses have been the main beneficiaries of this development, with the value of Argentine soy exports to China for January to August of 2025 shooting up by more than $700 million.

The perceived hypocrisy of the United States bailing out an economic competitor has given domestic critics of the deal significant ammunition. However, looking past the economics, the deal with Argentina appears emblematic of a more strategic repositioning of U.S. foreign policy to focus on building strength and stability within its own shared neighborhood.

Secretary of State Marco Rubio has called for an “Americas First” foreign policy; meanwhile, Secretary of the Treasury Scott Bessent has labeled U.S.-Argentina cooperation as part of an emerging “economic Monroe doctrine.” While this framing may rouse more hostility than goodwill around the region, it is not far off the mark. The past two decades in Latin America have been marked by a reticence by the United States to engage, even with like-minded governments that are interested in building closer partnerships. China has rushed to fill this void, where it has not so much outcompeted the United States as simply entered sectors where the United States was not interested in competing in the first place. This leaves Washington with few real levers to pull in its dealings with the region. Absent a resource-backed counteroffer to help countries meet their infrastructure, technological, and development goals, U.S. calls for countries to limit their dealings with Beijing have fallen on deaf ears.

By offering a $40 billion swap line to Argentina, the United States is leveraging the power and dynamism of U.S. financial markets to support a democratic partner in the region. In 2023, Milei’s Peronist predecessor Alberto Fernández flew to Beijing to secure a $6.5 billion swap from China. Announcing the financial relief package, his second with China, Fernández effusively thanked Xi and tweeted, “Every time we went through difficult times, Xi Jinping’s government was very generous and attentive to our needs” (translated by authors). Argentina’s economy is still suffering under Milei, and China will remain a major commercial partner of Argentina and its South American neighbors for the foreseeable future. But the United States has now replaced China as Argentina’s financial anchor and is $33.5 billion more generous.

Nevertheless, resolving the sticking point on agriculture could be difficult. The agricultural sector is a key source of foreign exchange reserves desperately needed by Milei to maintain his low-inflation economic program. But so long as Argentine soy farmers are seen as profiting at the expense of Americans, the Trump administration will face considerable scrutiny over its foreign financial assistance. This has implications for how Milei governs as well, as his continued relationship (and potentially continued support) with the United States will depend on the White House perceiving a return on its investment.

Furthermore, there is no indication that a $40 billion currency swap will be able to correct the macroeconomic headwinds Argentina faces. Emphasizing Milei’s peso-pegging, the Financial Times warns of the “folly of defending exchange rate bands against the market.” Nobel-winning economist Paul Krugman rejects the deal’s potential, pointing out that Argentina has thrice defaulted on sovereign debt since 2001 and predicting that investors will “sell their Argentine assets at inflated prices, after which the peso will promptly fall again.” Time will tell if these pessimistic forecasts hold, but should Milei find himself headed to Washington again to request assistance, he may face a less receptive audience.

Overcoming Chinese Challenges

But Argentina is not strategically insignificant. The country possesses vast deposits of minerals necessary for crucial manufactured goods—including solar panels, wind turbines, smartphones, and advanced military technology. The Pentagon is investing billions to stockpile these supplies, and China has announced unprecedented export controls on critical mineral supply chains. Facing this threat, Bessent announced on Wednesday that the government would exert more control over strategic mineral industries.

The country Milei leads is expected by 2027 to become the world’s second-largest producer of lithium, a crucial element in electric vehicles. Argentina also supplies copper, aluminum, boron, iron, molybdenum, potash, uranium, vanadium, zinc, and silica sand, among other critical minerals. In 2024, Milei signed agreements with the Biden administration to facilitate U.S. investments in Argentina’s mining sector. In a visit to Buenos Aires, Biden’s Secretary of State Antony Blinken praised Milei’s economic policies as “absolutely vital.” Referring to minerals, Blinken commented, “We see extraordinary opportunity here in Argentina . . . what’s so evident is that Argentina has what the world actually needs.”

This desire to partner on securing mineral supply chains has carried over into the Trump administration. However, despite strong relations between the Trump and Milei governments, U.S.-Argentina minerals collaboration has been slow to materialize. Further complicating matters is Argentina’s federated governance scheme, which grants provincial governors control over the mineral resources found in their territories. This means that strong high-level relationships do not always trickle down to the local level, and mining companies can face challenging regulatory environments and community relations issues. Furthermore, the cash-strapped Milei administration is not able to support the infrastructure needed to connect remote mine sites in Argentina’s hinterlands to more central processing and export facilities. Recent talks between the U.S. International Development Finance Corporation (DFC) and the government of Argentina around boosting critical minerals investment are a positive, if long-overdue, development in this regard.

Argentina’s movement towards Beijing, especially in defense, is another reason to support Milei’s economic program. While his predecessors for a time courted Chinese-made fighter jets and allowed China to build a military-linked space station in Argentina without oversight, Milei’s administration bolstered military cooperation with the United States and inspected the Chinese space station, demanding greater transparency from Beijing. Moreover, Argentina has been a top participant in Sino-Latin American military cooperation. Under Milei, Argentina has requested to join NATO as a Global Partner, supporting the military alliance increasingly critical to deterring Putin’s aggression. In July, Secretary of Defense Pete Hegseth discussed with his Argentine counterpart multiple U.S. defense priorities, including critical mineral supplies, South Atlantic cooperation, and deterring “malign” (meaning Chinese and Russian) influence in the Americas. Argentina now flies F-16 fighter jets, and has purchased U.S.-made Stryker armored vehicles as part of a broader defense modernization program that has focused in part on interoperability with the United States. The past two commanders of U.S. Southern Command, the U.S. military’s regional command for Latin American operations, have met with Milei’s defense ministry to ensure free commercial and naval navigation in the Southern Atlantic from potential Chinese interference. Building ties in Buenos Aires strengthens Washington’s standing when competing with Beijing.

Finally, Argentina has expressed an eagerness to support Washington’s counternarcotics efforts in South America. Long detached from the criminal dynamics that fuel violence farther north, Argentina has faced a spike of killings in cities like Rosario that fall along strategic drug trafficking routes. In October 2025, Argentina’s National Anti-Terrorism Center signed an agreement with the FBI to enhance collaboration on money laundering and provide for the development of joint training centers. The timing of the agreement coincided with the announcement of the first currency swap agreement, suggesting that the United States and Argentina view economic cooperation as but one facet of a broader partnership. Argentina and the United States could also do more to counteract illegal fishing, mainly perpetrated by poorly-regulated Chinese deepwater fishing fleets that have pillaged Argentine waters for years. Additional U.S. naval assets, as well as radars and surveillance equipment, could help Argentina to crack down on this activity and secure its exclusive economic zone. 

As Benjamin Gedan, National Security Council director for South America’s Southern Cone countries under Obama, explains, cooperating more with Argentina now “would rightly reward Milei’s sensible economic strategy and foreign policy partnership, and demonstrate the dividends for regional leaders who wager on Washington in great-power competition.” However, Washington will likely not expect this support to go unreciprocated. The onus will also be on Argentina to demonstrate its willingness to support U.S. policy objectives in the Americas, and perhaps beyond.

Strategic Benevolence

Since 2017, countering China in Latin America has been a bipartisan foreign policy priority. Washington has long faced criticism for warning Latin American governments against approaching Beijing while failing to provide viable economic alternatives. Along with the DFC, the first Trump administration and the Biden administration launched investment initiatives—named América Crece and Americas Partnership for Economic Prosperity, respectively—with the clear goal of competing with China’s Belt and Road Initiative (BRI) in Latin America, but found mild success. Referring to Latin America, Senator Tim Kaine stated in August, “As China expands its reach around the world, it’s critical to U.S. national security that we prioritize strengthening alliances between our democratic partners.” At a time when Latin America’s share of BRI investments has fallen for three consecutive years, Washington has a timely opportunity to finally compete with China in its own hemisphere.

Looking globally, securing mineral supply chains and deterring Russian and Chinese influence at strategic chokepoints are critical foreign policy objectives. The United States and its NATO partners face Russian naval threats in Greenland and Alaska while Asian allies attempt to deter a Chinese takeover of Taiwan, at the head of the Pacific’s first island-chain. China has built military-purpose islands in the South China Sea and its first overseas military base in Djibouti near the Suez Canal. China opposes a U.S. company purchasing China-linked ports beside the Panama Canal’s entrances, and Mauritius’s close ties to China, while possessing a major U.S.-UK Indian Ocean airbase, have concerned U.S. and British officials alike. In 2023, a Chinese state-owned enterprise nearly built a military-capable megaport at Argentina’s southern tip—which oversees an Antarctic maritime corridor—under Milei’s predecessor.

While all eyes are currently on the U.S. military buildup in the southern Caribbean, Argentina may potentially be even more consequential for understanding the future of U.S. strategy in Latin America. Using high-level economic agreements to unlock U.S. financial markets and building on traditional strengths in security and defense cooperation could pave the way for the United States to better compete with China in the Western Hemisphere. With elections on the horizon in other key countries like Chile, Peru, Colombia, and Brazil, what happened in Argentina may represent a new playbook for how the United States engages regional governments. More broadly, the willingness to stand behind Argentina suggests that the United States is dusting off the past two decades of neglect for the region and returning to past concepts that the United States’ own security and prosperity are interlinked with that of the Americas as a whole.

Henry Ziemer is an associate fellow with the Americas Program at the Center for Strategic and International Studies in Washington, D.C. Henry Large is a doctoral candidate in Latin American Studies at the University of Oxford.