【By Observer Net, Qi Qian】

The Trump administration viewed the Milei government as a staunch ally, but was recently betrayed: just after the US promised to allocate $2 billion to help Argentina, which is in a financial crisis; Argentina then announced tax exemptions, competing for the soybean market.

This move by Argentina has caused strong dissatisfaction among American farmers. Media reports indicate that the US Secretary of Agriculture personally intervened to accuse the Treasury Secretary Bassett.

However, on October 9th local time, Bassett announced that the aid program for Argentina would continue. He posted on the social media platform X, stating that the Department of the Treasury had finalized a $2 billion currency swap framework with Argentina and directly purchased Argentine pesos.

According to reports from CNN and Reuters, this move fulfilled President Trump's promise to support this fragile country, causing the Argentine peso and Argentine dollar bonds to rise significantly. However, at the same time, Democratic lawmakers strongly criticized this aid plan, calling it "spending money on foreign governments" while the US government was shut down.

"Today, we directly purchased Argentine pesos," Bassett wrote in a statement. "In addition, we have finalized a $2 billion framework agreement for a currency swap with the Argentine central bank." He pointed out that the US Treasury is ready to "take all necessary and essential special measures immediately" to maintain market stability in Argentina.

Bassett also said: "Argentina is facing serious liquidity shortages... A strong, stable Argentina that helps consolidate prosperity in the Western Hemisphere aligns with America's strategic interests. The success of Argentina should be a priority for both parties in the United States."

Screenshot of Bassett's tweet

IMF Managing Director Georgieva praised the US' move on X, stating that "this strong economic plan is based on fiscal discipline and a sound foreign exchange system to promote reserve accumulation," and the organization "fully supports it."

Argentine President Milei thanked Bassett and Trump. He wrote: "As the closest allies, we will jointly build an economically free and prosperous hemisphere. We will work every day to provide opportunities for our people."

It is reported that Milei is expected to meet with Trump at the IMF and World Bank annual meeting in the US next week.

The US Treasury spokesperson declined to provide further details, including the amount of pesos purchased and the structure of the currency swap agreement.

Reuters observed that after the announcement, Argentina's 2035 bonds rose 4.5 cents, trading at 60.5 cents per dollar. The Argentine peso closed at 1,418 pesos per dollar that day, up 0.8%, after falling 3% in the morning. Local stock markets rose 5.3% on Thursday. Argentine stocks listed on US exchanges surged 13%.

CNN called this aid program "a lifeline for Argentina." Reuters also stated that Argentina is about to hold mid-term elections on October 26, and this plan will boost support for Milei's party. However, whether this will improve the electoral prospects of Milei's party is not guaranteed, as public dissatisfaction with his austerity measures continues to grow.

Later, Bassett insisted on Fox News that the plan was not "direct relief." He also claimed that it provided strategic benefits for the US, including Milei's commitment to "drive China out of Argentina" and open up the country for US companies to develop its rare earth and uranium resources.

However, Democrats complained that the Trump administration ignored the困境 of the US government being closed, yet provided funds for foreign governments and global investors. Senator Elizabeth Warren said: "Trump supports foreign governments while closing our own government, which is absurd."

According to reports, several Democratic senators are introducing legislation to prohibit the use of the foreign exchange stabilization fund to assist Argentina and global investors. Reuters added that the measure is mainly symbolic, as Democrats remain a minority in both houses of Congress.

According to another report from Politico, while the Trump administration insisted on aiding Argentina, American farmers are struggling. Some farmers criticize the US government for aiding Argentina at this time as "unfair," as Argentina is heavily competing with the US for the American soybean market through tax exemption measures, selling low-priced soybeans to Chinese buyers.

China's purchase of US soybeans has dropped to zero. New York Times map

After Trump started trade disputes, China's orders for US agricultural products sharply decreased, and American farmers suffered greatly.

At the same time, Chinese companies are gradually turning to Brazil for soybean purchases, and South American countries are rapidly seizing the market. Last month, the Argentine government announced a temporary suspension of the export withholding tax on soybeans, aiming to enhance the competitiveness of its soybeans in the international market. According to Reuters data, the total volume of Argentine soybeans purchased by Chinese buyers within a short period reached 20 ships, about 13 million tons.

This move caused strong dissatisfaction domestically in the US. According to Argentine media reports, during the recent UN General Assembly in New York, someone captured a scene: Bassett received a private message, which was an accusation against Argentina's reduction of the export tax.

AP caught Bassett checking messages during the UN General Assembly

"The situation is very unfortunate. Yesterday we helped Argentina, and now Argentina has canceled the grain export tax, selling it to China at a lower price, which should have been our sales window," the message read. Although the specific identity of the sender cannot be determined, from the screen of Bassett's phone, you can see the letters "BR", which correspond to the initials of US Secretary of Agriculture Brooke Rollins.

However, for the Argentine government, which is in a severe financial crisis, even if it offends the US, it must sell grains to China. Recently, the Argentine government also raised the standards for sorghum exports, increasing exports to China by tightening criteria such as bulk density and impurity content.

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