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.

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.