For the better part of 20 months, President Javier Milei of Argentina surfed a major wave of optimism, as he appeared on the brink of achieving an economic miracle.

Using tough financial remedies, Mr. Milei, a self-proclaimed radical libertarian, tamed out-of-control inflation and slashed a bloated budget. And even as his painful fixes made life harder for millions of people, his popularity held on hopes that he may finally succeed where his predecessors had stumbled: pulling Argentina out of chronic crisis.

Then, in recent weeks, Mr. Milei found himself facing an economic meltdown so severe — investors had began panic-selling Argentina’s currency, the peso, and ditching Argentine assets — that it fueled panic over a possible default on the nation’s enormous international loans and prompted President Trump to throw his South American ally a lifeline by offering a $20 billion bailout.

Stepping in, the U.S. Treasury said it was ready to do “what is needed” to stop markets from derailing Mr. Milei’s agenda. “President Milei is restoring economic stability after decades of Argentine mismanagement,” said Treasury Secretary Scott Bessent.

The extraordinary show of American support has, at least for now, calmed market jitters and restored faith in Mr. Milei’s economic experiment. The financial help may also prove crucial to Mr. Milei’s political fortunes as a legislative election next month is shaping up to be the first major electoral test of his economic policies.