Javier Milei was happy this Monday at the ceremony where his hero Donald Trump took office as president of the United States. The friendly bond between the Argentine rightist and the new North American management is publicized almost daily, especially with the brand new official (and richest man in the world) Elon Musk. But beyond the smiles, the outlook for the Argentine economy is more than blurry.
In his inauguration speech, Trump confirmed the creation of the External Revenue Service to collect tariffs from foreign countries. “A lot of money will enter our treasuries and the American dream will be real again,” he stated, in line with what he stated before taking office: “We will begin to charge those who make money at our expense with trade, and they will begin to pay, finally, his fair share.” Their intention is to impose tariffs on China, Mexico and Canada.
States and large multinationals have been anticipating Trump’s protectionist policies, resulting in the devaluation of the currency of China and Brazil (two of Argentina’s main trading partners) and the fall in the price of commodities (products that tend to to have a unified price in international trade), especially soybeans. Argentine agriculture and industry are already beginning to be impacted by Milei’s decision to keep the peso backward and deregulate trade, contrary to the world.
In addition, direct trade from Argentina to the United States could be affected by tariffs; the country has important exports of minerals and meat, among others. In Trump’s first term, despite good relations with Mauricio Macri, he imposed tariffs on the country’s exports. Milei’s dream of achieving a free trade agreement seems distant when the White House is calling into question NAFTA (an agreement between the governments of the United States, Mexico and Canada to reduce trade barriers).
The North American magnate had already taken an important leap in the trade war with China during his first term by raising tariffs on products from that country and then Biden increased them again. Trump campaigned stating that he will finance a reduction in domestic taxes (mostly on the rich) by imposing a 10% tax on all US imports and a 60% tax on goods from China, in the coming weeks we will see how much There is reality and how much is discourse.
The international panorama is different from that of 2016 when Trump began his first term, the worsening of tensions with China, the war in Ukraine, Israel’s genocide on the Palestinian people, and a global economy that has not recovered from the blow that occurred during the pandemic, pose challenges that are difficult to solve for the American establishment. The internal difficulties within the new North American management to respond to this scenario make it even more unpredictable what lurches the policies of the imperialist power will have.
The chains of external debt
The Argentine government says it is close to reaching a new agreement with the Fund and hopes to soon obtain a disbursement of some US$11 billion or more. Although the United States has a central role in the IMF, European countries, Japan and even China have decision-making power within the organization. And no matter how much praise Trump or Elon Musk may give Milei, they will never give dollars without imposing greater demands. The international organization does not want to repeat the history of the credit granted to Mauricio Macri and that the currencies are used to be sold on the market at a low price; For this reason, the conditions related to the exchange rate CEPO are at the center of the negotiation.
It is also important to keep in mind that the rise in costs for US companies and workers due to import tariffs is a problem for the FED’s (the equivalent of the Central Bank in the United States) objectives of lowering inflation. . This is why the entity lowered the rate of interest rate reduction, generating an additional problem for the Argentine financial front. If Luis Caputo intends to issue new external debt to pay the heavy maturities of this year and the following ones, the rate defined by the FED is the minimum component that he must pay (to which he must add the one imposed by the large banks and investment funds) .
As for the investment route to obtain dollars, Elon Musk’s recommendations in “X” are not enough for large companies to choose to allocate their funds to ventures in Argentina. Even if the RIGI, driven by the extreme neoliberalism of La Libertad Avanza, will begin to do so, it gives all the facilities to multinationals to take foreign currency out of the country before they can give financial oxygen to the country subjected to an unpayable (and fraudulent) external debt. .
Any “collaboration” between Trump and Milei only implies redoubling national submission. As the revolts against IMF adjustment plans around the world show, imperialism pushes millions into misery, while multiplying struggles against its objectives. It is key to recover the unions to put an end to the truce of the union bureaucracy and build a path of struggle that leads to the general strike until defeating the adjustment plan of the national government and the International Monetary Fund.
Source: www.laizquierdadiario.com
