Why Trump's bet on Argentina was more strategic than just a short-term, winning trade

By Jules Rimmer

America's propping up of Milei's administration should be interpreted as a move to futher its interests in Latin America as a whole, not political or market opportunism.

President Milei won around 41% of the vote in mid-term parliamentary elections, much better than polls and markets expected.

The U.S. contribution to Javier Milei's electoral triumph in Argentina should be viewed through the prism of geopolitics and spheres of economic influence, rather than a winning wager.

That's the opinion of one specialist emerging markets investment house, TT International, which is based in London.

"Argentina, and its wealth of copper, lithium and liquified natural gas are an increasingly important geopolitical focus for the United States as part of its 'new Monroe doctrine,'" says senior investment analyst Harry Thomas.

"We believe the U.S. administration's support of Milei is strategic rather than tactical," he adds.

The Monroe Doctrine dates back to the U.S. president in 1823 who articulated his opposition to further European colonization of Latin America which he asserted would henceforth be a U.S. sphere of influence. The assistance lent by America to Milei then, some of which has prompted accusations of corruption should be interpreted in the context of America's contest with China for commercial advantage across different continents.

President Donald Trump himself articulated a very different vision.

"That was a big win," Trump said of Milei's victory in Argentina's election on Sunday, before adding, "That election made a lot of money for the United States". Because not only had the U.S. Treasury arranged a $20 billion swap line for Argentina enabling it to defend its currency in the run-up to the vote, but it had also reportedly spent more than $1 billion buying pesos on the foreign exchange market.

Neither the U.S. Treasury not Argentina's economic ministry responded to a request for the exact purchases.

When the peso (USDARS) rallied almost 10% in the immediate aftermath of Milei's ballot-box success, the bet, on paper at least, was showing a healthy profit. Argentina's ten-year sovereign bonds rallied twelve percentage points to 69 cents on the dollar and the Merval index AR:SPMERVAL spiked 39% over the last five sessions.

Treasury Secretary Scott Bessent was keen to utilize the foray into Argentinian politics and finances to score some political points with Democratic opponents back in the U.S. "I am happy to inform you both that the Argentine economic bridge has now turned a profit for the American people," he wrote to Democratic senators including Sen. Elizabeth Warren.

TT's Thomas believes "the results of the midterm elections make Milei a viable candidate in 2027 (presidential election). This significantly increases his leverage to negotiate with regional governors and members of the upper and lower houses."

Malcolm Dorson, head of emerging markets at ETF provider Global X, also believes the probability of passing more structural reforms is enhanced and Milei can now "focus on attracting foreign direct investment and driving sustainable growth. Dorson also points to Argentina's low valuations. A price-to-earnings multiple for the market of just seven times is less than half the estimated multiple of the emerging markets universe.

Having had some initial success with his reform agenda, bringing down inflation and creating a budget surplus, Milei's radical program of deregulation, spending cuts and market liberalization had stalled in 2025.

Not everyone is as optimistic, though. In a column on Substack, former Bridgewater investment committee member Bob Ellliott is more skeptical of Milei's prospects for his reformist agenda. "Vastly more painful changes are needed to put Argentina on a sustainable path." For Elliott, "Argentina needs a much lower exchange rate, much higher interest rates and a significant economic contraction" to stabilize the balance of payments. He notes, "Milei has shown no tolerance for such an environment."

The Global X MSCI Argentina ETF ARGT jumped from $70 on Friday to more than $91.

-Jules Rimmer

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