Taking divergent paths.
As we approach the sixth month of Trump’s second presidency, we can compare it to another novel and ally administration: Javier Milei’s in Argentina. In fact, both presidents have praised each other and have met several times. While some expected Milei’s economic policies to influence Trump, and others even believed that Trump would be a libertarian president, they’re proving wrong.
Before Trump and Milei were elected, both the US and Argentina were running extensive deficits, and both leaders vowed to address the problem. On the one hand, Milei made good on his promise in just one month and balanced Argentina’s budget for the first time in over a decade. Now, 18 months into his presidency, the Argentinian government is spending less than it takes from taxpayers.
By contrast, the US is not only still facing a fiscal crisis, but Trump’s administration refuses to cut spending. While Trump promised to balance the budget, the President’s “Big, Beautiful Bill” is estimated to cut twice as much revenue as it will cut spending, thus adding $2.4 trillion to America’s staggering $36.2 trillion debt. Resistance to this bill from the Republicans seems so far futile.
Another area where American and Argentinian policies can be compared is deregulation. In Argentina, Milei set up a Ministry for Deregulation that has issued approximately two deregulations per day, according to a study by the Cato Institute. The Ministry is so important to Milei’s administration that the Ley Bases, the only piece of legislation that the government pushed and was able to pass, included special powers delegated by Congress so that deregulation could be enacted.
In the US, there was some expectation that Trump would follow in Milei’s footsteps and implement significant deregulation. Initially, the creation of the Department of Government Efficiency and the appointment of Elon Musk as its chair gave hope that this would be the case. But DOGE focused mostly on enacting meager budget cuts, most of which are not even codified in Trump’s bill. Musk himself barely lasted a few months as chair of DOGE, and the department’s future is unclear following his departure.
Yet another area of comparison between the US and Argentina, and perhaps the most important one for its global ramifications, is trade policy. President Trump’s aggressive protectionist policies have brought the world closer to recession. Imports in the US are already plunging, as companies adjust to the new rules. Many of the tariffs that Trump’s administration announced have been paused, but there is uncertainty about their application, and yet, economic losses for US consumers are certain. If economic theory and historical evidence teach us anything, it’s that the whole cost of these measures will fall on the public, who will pay higher prices for goods and services and will have fewer of them at their disposal. The history of Argentina is a prime example of the negative consequences of protectionism.
Conversely, the Milei administration has gradually begun to lift tariffs and non-tariff trade barriers in Argentina, causing prices of imported goods to fall. The main issue for the government continues to be Mercosur, South America’s trading bloc, which imposes relatively high tariffs to the benefit of Brazil and the detriment of Argentina. However, Milei has called for lowering Mercosur tariffs and for more free trade agreements. Argentina, one of the most restricted economies in the world, is now even ready to sign a trade agreement with the US, Milei has said.
Although some libertarians may be disappointed by Trump in light of Milei’s achievements, the root of these results is ideological. All this could have been predicted: Trump could never lead a libertarian administration because he is not a libertarian. As for Milei, a self-described anarcho-capitalist, there is hardly any question that his final goal is dismantling the state, despite his occasional pragmatism.
A shared goal of resisting “the left” is not enough to bring together opposing traditions of economic thought like Trump’s mercantilism and Milei’s free market economics, let alone their opposing political visions. It is not enough to institute a new department or to trust that a single advisor can determine a libertarian course for major policies. Perhaps the lesson is that libertarian policies are unlikely to take place unless a libertarian leads the change. This should have been obvious from the beginning, but it is never too late to learn.
