Palacio del Congreso, Buenos Aires, saiko3p/Adobe Stock

It was a victory that surpassed all expectations. Javier Milei’s party La Libertad Avanza won nearly 41 per cent of the vote in Argentina’s recent legislative elections, marking the first time a ruling party has won a midterm election in the country since 2017.

Despite a low turnout, Argentines voted to renew half of the lower house and a third of the Senate, with Milei’s party gaining 64 of the 127 lower house seats and 13 of the 24 Senate seats that were contested.

The result marks a decisive legislative victory for Milei, who was voted in as president in late 2023 with the unenviable mandate of shaking up the economy of the International Monetary Fund’s (IMF) largest debtor.

Renê Medrado, a partner at Pinheiro Neto in São Paulo and chair of the IBA International Trade and Customs Law Committee, believes the deal is underpinned by both economic rationale and geopolitical strategy. ‘These two areas were generally seen separately in international relations, but have increasingly mingled,’ he says. ‘Trade measures have been used to achieve security goals, and national security has been used to influence and affect trade.’

Prior to the proposed US financial lifeline, Argentina was in an economic bind, faced with low reserves and a high inflation. Although the country’s inflation rate has dramatically reduced since the start of Milei’s tenure, it remains among the highest in the world.

In September, the government briefly lowered export taxes on soybeans and several other products in a bid to increase foreign sales and stabilise the peso. This triggered a Chinese buying frenzy, quickly drawing the ire of US farmers who have been unable to export soybeans to China since May as a result of ongoing US-China trade tensions.

Within hours of Trump announcing the potential bailout, a leaked message exchange between US government officials labelled Argentina’s actions unfair to US farmers. Argentina abruptly reimposed export taxes on soybeans.

Matt Barlow, an expert in international political economy at the University of Glasgow, says this was another example of the Trump administration’s attempts to influence Argentina – this time on foreign trade policy. ‘These export taxes were reimposed 72 hours later because the US said it was an unfair advantage against US soybean farmers,’ says Barlow. ‘This really showed the US dictating to Argentina what it should be doing.’

Both Barlow and Medrado believe the recent US interventions in Argentine politics also point to increasing efforts by the US to ‘rebalance’ China’s growing influence in agriculture, energy and minerals, both in Latin America and globally. ‘Argentina’s recent steps fit this broader context,’ says Medrado. ‘One can remember that the Fernandes government in Argentina was closer to China than to the US. The Milei government shifted that trend completely and is benefiting from that.’

On 13 November, the US and Argentina signed a trade deal which provides Argentina with ‘preferential market access’ for US exports, including some medicines, chemicals, technology products, motor vehicles, and agricultural food products.

Separate trade deals were also brokered between the US and Guatemala, El Salvador and Ecuador, although these focused on lowering tariffs on certain food exports, including bananas and coffee beans, that are largely not produced in the US.

In a statement, the White House said the four deals would help support US farmers, ranchers, fishermen, small businesses, and manufacturers, many of which have borne the brunt of Trump’s volatile trade polices. In Argentina, the deal has largely been viewed as a boost, both for the country’s credibility with global financial institutions, as well as for Milei personally.

Emboldened by the recent legislative wins, Milei’s administration is now pushing ahead with a second wave of reforms to loosen labour laws and modernise the country’s taxation and pensions systems. ‘Obviously, Milei is riding high at the minute, but inflation is still high, unemployment is rising, the cost of living is difficult for a lot of people, and that's before any of these changes to labour laws come in,’ says Barlow. ‘People are feeling the pinch and Argentina has a strong history of social mobilisation.’

2026 looks likely to be another challenging economic year. Argentina will need to make major fiscal reforms to start repaying the IMF - it currently owes more than $41bn. The repayment terms of the US bailout have not been made public.

The US may have helped secure Milei’s election win, but Robert Russell, senior counsel at the RS Russell Professional Corporation in Ontario, Canada, is concerned about the rule of law implications of such direct, political intervention. ‘The US is entitled to revive foreign aid based on US national interests,’ says Russell, who also co-chairs the IBA North American Regional Forum. ‘If you’re doing it behind the scenes, that’s one thing,’ he says, ‘but if you’re doing it and advertising it to the voting public, it's clearly meddling. That is election interference and that gets into disrespect for the rule of law.’