Is Argentina influencing the United States?

As Argentina’s maverick libertarian president, Javier Milei, marks one year in office, his efforts to revive the economy are still a work in progress, but his policies are proving influential in the United States.

Milei came to power with the mission of cutting state spending in a country that had been living beyond its means for years.

Despite its harsh austerity measures and a continued increase in poverty ratesstill has the support of just over half of the population, according to a survey conducted earlier this month by the CB Consulting organization.

That level of popularity is similar to that of Donald Trump right now. About half of American voters backed the president-elect in last month’s presidential race, and Trump has praised Milei as a man who can “make Argentina great again.”

Meanwhile, tech billionaire Elon Musk, who appears set to play a key role in the incoming US administration, also praised Milei and said Argentina is “undergoing a giant improvement” under his leadership.

But what do Trump and Musk see in Milei? And are they as ideologically close as is often assumed?

Milei’s greatest achievement so far, the one most appreciated by Argentines, is his success in reducing inflation. But it has caused a stir in the United States due to its deregulation campaign, which has been exploited by small-government activists eager to reduce the size of the state in Washington in line with what is happening in Buenos Aires.

In Milei’s initial package of measures, he cut state fuel subsidies and halved the number of government ministries.

It is now trying to push through plans for a massive sale of state-owned companies, including the country’s flagship airline, Aerolíneas Argentinas, which was already privatized once before being renationalized in 2008.

This is all music to the ears of Elon Musk, who has been tasked with similar cost-cutting initiatives under the banner of the call Department of Government Efficiency – a misleading name, as it is an advisory body, not an official government department.

Musk and his co-leader in the department, billionaire Vivek Ramaswamy, have said they want to cut federal regulations, oversee mass layoffs and close some agencies entirely.

Musk has talked about cutting federal government spending by $2 trillion (£1.6 trillion), about a third of annual spending. According to him, Milei is doing “a fantastic job” in Argentina by “eliminating entire departments” and would like to do the same in the United States, with Trump’s blessing.

But veteran observers of Latin America are skeptical.

Monica de Bolle, a senior fellow at the Peterson Institute for International Economics in Washington, says that “taking inspiration from Milei to reduce the size of government makes no sense.”

“The situation in Argentina is very particular for Argentina, because it was about the elimination of decades of mismanagement of public resources. That has nothing to do with the United States.”

De Bolle says Argentina had no choice but to take action, because the government’s overspending was so excessive that the country “exploded into crisis every few years.”

“That is appropriate for Argentina, but for no one else.”

Marcelo J. García, Americas director at Buenos Aires-based global consulting firm Horizon Engage, says Milei’s decision to brandish a chainsaw during the election campaign as a sign of his approach to government was a “masterpiece.” of political marketing that has “captured the imagination of activists in small states around the world.

But he maintains that while Musk’s own business interests would benefit from less government regulation, that’s not necessarily what Trump wants.

“I’m not sure the Trump platform is compatible with a small government like a Milei-type chainsaw,” he told the BBC.

He notes that Trump’s policies “require big government in some areas,” such as building border walls and mass deportations of illegal immigrants. “You can’t do those kinds of massive programs with a small government.”

In Milei’s opinion, it is better to leave infrastructure projects in the hands of the private sector and have nothing to do with the government.

Milei and Trump are on the same side in the global culture wars, denouncing what they see as the “woke agenda.” But in economic terms, their ideas are very different.

Milei is passionate about free trade and Argentina is a member of the South American trade bloc Mercosur, which also includes Brazil, Paraguay and Uruguay.

Although he is in favor of the recent Mercosur reform free trade agreement with the European Union, He doesn’t like the way the organization refuses to allow its member countries to reach their own agreements. As a result, he says, Mercosur “ended up becoming a prison.”

“If the bloc is not a dynamic engine that facilitates trade, drives investment and improves the quality of life of all citizens of our region, what is the point?” he said at the Mercosur summit in Uruguay earlier this month, where the agreement with the EU was signed.

Trump also has problems with his own regional trade alliance, the United States-Mexico-Canada Agreement (USMCA), but for reasons opposite to Milei’s.

Trump wants to renegotiate the USMCA, an agreement he crafted during his first term, as a way to protect American manufacturing and safeguard American jobs.

He has even found a way to weaponize the alliance by threatening to impose a 25% blank tariff on goods from Canada and Mexico unless they secure their shared borders with the United States.

Monica de Bolle doubts Trump shares Musk’s enthusiasm for a smaller state: “You can’t be a populist nationalist and worry about the size of government. So Trump doesn’t care. He put Elon in there because he’s fun to have “someone there making noise.”

The economic debate will continue and continue, both in the United States and in Argentina. But ultimately, if half your population supports you, it means the other half doesn’t. Trump will have to deal with that after his inauguration on January 20, but Milei already has his own polarized population to deal with.

For Marcelo J García, Milei is a “divisive leader” who has not tried to win over his opponents.

“The other half of the country that didn’t support him will probably never support him, no matter how well the economy does, because he doesn’t want them to support him,” he says.

“Leaders tend to want to please everyone. That’s not the case with Milei,” he adds.

In his opinion, this is a real weakness: “You cannot build a long-term sustainable political project if you do not make progress towards the people who did not vote for you.”

Milei’s next big test of public opinion will come in October 2025, when Argentina holds midterm elections. That could prove crucial in deciding whether his small-government revolution determines the country’s future or, like previous attempts at reform, loses steam.