Argentina’s Trade Deal with the U.S.: A Distant Possibility

A possible trade deal between Argentina and the United States meets many problems because it depends on complex political as well as financial factors. Despite the ideological alignment between Argentine President Javier Milei and former U.S. President Donald Trump, striking a deal remains uncertain and complicated. While both countries have expressed mutual interest, there is little clarity on the scope of their ambitions.

Unclear Trade Aspirations and Economic Realities

In the midst of a volatile global economy, shaped in part by Trump’s trade war policies, Argentina and the U.S. have hinted at closer ties. However, the extent of their commitment remains vague. Buenos Aires has floated the idea of a free trade agreement (FTA) or a “reciprocal tariff deal,” while Trump has suggested he is open to exploring “any possibility” with Milei, whom he has praised as a “great leader.”

From an economic standpoint, the United States plays a significant role in Argentina’s trade and investment landscape. It is Argentina’s largest foreign investor and the second-largest destination for its exports, behind Brazil. In 2024, Argentine exports to the U.S. totaled $6.395 billion, accounting for 8% of the country’s total exports. Conversely, Argentina represents a much smaller fraction of U.S. trade, absorbing only 0.30% of U.S. exports, amounting to $6.163 billion.

These numbers show that Argentina needs U.S. trade. They point to a clear problem: Argentina and the U.S. act more as rivals than as partners in trade. This situation makes it hard to cut tariffs on both sides, especially in the sensitive agricultural sector, where each tries to win global markets.

Conflicting Interests and Structural Obstacles

Tariff cuts between Argentina and the U.S. look unlikely because their economic goals diverge, mainly over agricultural products. The U.S. may try to secure deals in key sectors like oil plus mining; its overall push for new trade deals stays weak.

For Argentina, the motivation behind a potential deal appears to be more political than economic, aligning with Milei’s broader ideological push rather than a pragmatic trade strategy. A select few Argentine industries—such as honey, beef, and wine—might benefit from an FTA, but broader economic gains are uncertain.

The U.S. did not sign a new free trade agreement since 2012; this shows that Washington does not focus on trade deals. This fact stops Milei’s goals. Trade limits on Argentine exports – for example, limits on biodiesel imports set during Trump’s first term – will make talks more hard. A trade agreement today would contradict the U.S.’s current approach to global trade policy.

The Mercosur Dilemma: A Dealbreaker?

Beyond the political and economic hurdles, Argentina’s membership in Mercosur presents a structural barrier to a bilateral trade agreement with the U.S. The South American trade bloc, established in 1991 alongside Brazil, Paraguay, and Uruguay, operates under rules that prevent member states from negotiating individual trade deals outside the bloc. Any attempt to bypass this rule would require consensus among Mercosur members—a consensus that has remained elusive for years.

Milei said Argentina might need to loosen its rules or leave Mercosur to make a deal with Washington. This option will likely meet strong resistance from political groups as well as business circles in Argentina. Mercosur binds Argentina to deep economic links and strict rules; a break would cause serious disruption and political conflict.

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In truth, Argentina’s current trade situation, along with U.S. policies, do not favor a free-trade pact soon. Milei focuses on the good outcomes of closer U.S. ties but real obstacles remain. Any true progress calls for a change in U.S. trade goals as well as a clear shift of Argentina’s role in Mercosur – both of which seem unlikely at this time. For now, the idea of a trade deal between Argentina and the U.S. remains more of a political talking point than a feasible policy objective.