


U.S. Treasury Secretary Scott Bessent announced last week that the Trump administration was prepared to “do what is needed” to “support” Argentina and its president, Javier Milei, in advance of the country’s October legislative elections. Bessent’s call for “large and forceful” action by the U.S. government generated bipartisan uproar—not least because U.S. soybean farmers are facing their bleakest financial outlook in decades after their export revenue was snatched away by Argentina. Bailouts of banks, hedge funds, and foreign governments have long been despised by the U.S. public, especially when households face cuts to health care and other critical services. This all raises the question: Why would the United States bail out Argentina?
Desperate for hard currencies to push up the value of its volatile peso, Argentina is once again facing another financial calamity. A repeat customer to the International Monetary Fund (IMF), Argentina borrowed another $20 billion this April with promises of reform. The IMF sparked controversy when its chief essentially endorsed Milei’s party but failed to see through his shaky plans.
Milei pushed through a showy slashing spree, akin to the erratic erasures of government services by Elon Musk’s Department of Government Efficiency, which did little to fix the Argentine economy’s fundamental challenges. He famously gave an engraved chainsaw to Musk to showcase the dramatic cuts in public spending. But these cuts have not cured the country’s economic ailments, as roughly a third of the population lives in poverty and experts are predicting another recession.
The president focused on pushing up the value of the peso as a way to curb inflation. The overvalued currency has helped subsidize Argentina’s well-to-do take overseas vacations to Brazil and Miami. But it has harmed the country’s export economy, which is essential for generating hard currencies to pay off international debt. Chinese imports, for instance, surged nearly 80 percent in the first half of this year.
Milei himself has struggled to sustain the confidence of the markets and key allies. He is widely known for taking political advice from his deceased dog. His sister is his chief of staff and is caught up in allegations involving a cryptocurrency bribery scheme. He faced a setback in recent elections in Buenos Aires, where 40 percent of the country’s voters live. His party faces sagging poll numbers ahead of the October elections. Running out of options to keep his country’s currency from crashing, he now turns to Washington for help.
Milei has positioned himself as an ideological soulmate to U.S. President Donald Trump, embracing a mantra of radical reductions in government services and tarring political opponents as public enemies. The Trump administration seems eager to throw the Argentine president a lifeline but on questionable grounds. There are a slew of serious problems with this bailout.
First, the Treasury Department can only tap funds if Argentina’s financial problems could post a threat to the stability of the U.S. dollar. This is unlikely and would likely be a pretext for deploying funds without the approval of Congress. After all, the purpose of the Exchange Stabilization Fund (ESF), the source of any rescue package, is to maintain the stability of the U.S. dollar, not foreign currencies. And while Argentina does issue dollar-denominated debt instruments, there’s little evidence that this could materially harm the dollar’s value or standing. President Bill Clinton’s Treasury Department bailed out Mexico in 1995, and that was controversial. But the risks in Mexico’s case were more real, given the high level of trade between the two countries and the massive land border they share.
When it comes to bailouts using the ESF, the Federal Reserve and the Treasury have often overreached—drawing scrutiny from the public and Congress in the aftermath of 2008 financial crisis, in particular. Still, a bailout for Milei’s Argentina would be an unprecedented use of the fund, especially if the intervention is driven by ideology rather than financial stability for the United States.
Second, a Treasury bailout would bestow big benefits on financial investors who made the wrong bet. It’s common for bailout programs to utilize funds to make market-moving purchases that push up the value of assets and local currency. The funds typically aren’t used for making strategic investments in long-term economic growth. That’s why, in this case, hedge funds and other financial speculators specializing in distressed sovereign debt will see a windfall.
Investors piled into Argentine securities in 2024, hoping to see a profit if Milei’s cuts to public spending worked. Musk was especially bullish, announcing that his web of businesses would be looking to invest heavily there. He urged his followers to do the same. But in reality, the Argentine leader’s program flopped, and foreign exchange rates have tumbled to 1,500 pesos per U.S. dollar.
Musk, Milei, and others with libertarian leanings are supposed to be opposed to bailouts since those investors who made bad bets ought to take losses. But so far, Musk has been silent. And when the Trump administration signaled that it would push forward with a bailout, equities and fixed income markets surged, raising questions about who was truly benefiting from the billions of dollars in support.
Third, the bailout adds insult to injury for U.S. soybean farmers, who have been impacted by China shifting its purchasing from the United States to Argentina.
China is a major buyer of soybeans, which it uses to feed its substantial stocks of hogs, cattle, and poultry. Typically about a quarter of the United States’ soybean exports are sent to China—in 2024, that amounted to $12.6 billion worth. In some U.S. states, more than half of the crop is exported, and China is the biggest buyer. But in May, China essentially stopped buying soybeans in retaliation for new U.S. tariffs on Chinese goods.
China is now sourcing from Latin America and signed a deal with Argentina to import soybeans —the same month that it cut ties with U.S. suppliers. These deals further eroded the chance that U.S. soybean farmers could bounce back after the end of a trade war. And after Argentina declared a tax holiday, China quickly ratcheted up its imports, dealing another blow to farmers across the U.S. Midwest. This week, U.S. Agriculture Secretary Brooke Rollins reportedly sent a text message to Bessent, whose phone was visible to a photographer, lamenting the situation.
Caleb Ragland, a Kentucky soybean farmer and trade group leader, says he and his fellow farmers are in a financial freefall due to Chinese tariffs. Back in June, Trump declared that a deal with China was “done.” In reality, no deal addressed the soybean crisis. This has led to a surge in small-farm bankruptcies; filings have hit a five-year high. With harvest underway, more farms are expected to fold, especially given a lack of capacity in storage facilities.
Ragland and his fellow farmers are now protesting the Argentina bailout. While Trump has mused about aid to soybean producers, it is too late for many.
Farmers in Argentina aren’t much happier, with a major association complaining that the recent surge in sales to China is helping agricultural conglomerates, not individuals.
In the United States, the proponents of a bailout are few and far between. Even key Republicans such as Iowa Sen. Chuck Grassley have denounced it. But those with direct financial interests pushing for a rescue for Argentina and Milei argue that the lack of a U.S. response would allow China to fill the void, further increasing its influence in the region. It’s true that Argentina is a producer of critical minerals such as lithium, essential in the production of electric vehicle batteries. But that isn’t how the Treasury is justifying intervention.
The best path forward for the United States is to simply avoid the bailout and focus on fixing the mess faced by U.S. farmers and consumers. Farmers quickly need aid to stop the downward spiral they face stemming from mismanaged tariff policies. They are dealing with a triple whammy of inflation, worker shortages, and retaliatory tariffs, with soybean farmers in the direst of straits. Consumers across the country are frustrated by accelerating inflation on groceries and other basic goods, and they are rightfully unsympathetic to bailouts of foreign governments.
While few are holding out hope for Congress to intervene in Milei’s meltdown, they should. Legislators should ban misuse of the ESF by the Treasury and the Fed, particularly for bailouts to support certain political leaders. If members of Congress believe an intervention is warranted, they should debate it openly and take a recorded vote. Should they authorize one, legislators should be sure to investigate who would feast on the gains and institute levies on investors accordingly.
A program funded by U.S. taxpayers wouldn’t just be a boon for Milei. The IMF would also be a big winner, since Argentina could use funds from the United States to avoid default on outstanding loans due to the IMF. But the IMF undoubtedly shares responsibility for some of the problems the country faces. The playbook pushed by the IMF and global elites has overwhelmingly suited the needs of global investors, but it has overstayed its welcome. No economy can simply cut its way into prosperity. While government spending must be carefully controlled, chainsaw-style slashing does little to set a society up for success.
If the United States believes that it needs to deepen ties with Latin America, it needs to strategically use fiscal support, development finance, supply chain investments, and trade alliances to produce critical goods that will help the whole hemisphere compete with China.
But instead, it seems this will just be another financial bailout. When people face their own cost-of-living crisis at home, such as the one faced by so many in the United States and around the world, bailing out the powerful and politically connected only further cements distrust and isolationism.