Since day one of the Trump administration, the United States has sought to reassert its presence and tighten its influence in Latin America. In doing so, Washington is working to push back against what it perceives as China’s growing preeminence in the region — a rise made possible, in part, by years of U.S. disengagement. The effects of that shift are already visible: Panama has experienced it firsthand, while resistance in Brazil and even Colombia shows that Washington faces no easy task.
In this context, Argentina may prove to be an important testing ground. The United States’ recent announcement of a $20 billion bailout for Argentina is its latest and boldest effort to reassert influence in the hemisphere.
The idea behind the bailout is to replace Buenos Aires’s $18 billion currency swap line with China with a U.S.-backed $20 billion package. Together with the additional $20 billion to be financed by sovereign wealth funds and private banks, the bailout package amounts to $40 billion.
Beyond stabilizing Argentina’s finances, the bailout illustrates how both powers are now competing through economic statecraft rather than ideology. With President Javier Milei’s outspoken skepticism toward Beijing and political alignment with Trump, Argentina offers a revealing stage for this rivalry — particularly in two areas central to both countries’ strategic interests: critical minerals and strategic infrastructure.
The Lithium Question
Argentina, alongside Chile and Bolivia, forms part of the lithium triangle, home to more than half of the world’s known reserves. The salt flat of Hombre Muerto accounts for a significant share of Argentina’s output, and China has significant investments in Argentina’s lithium industry, with companies like Ganfeng Lithium and Zijin Mining involved in major projects.
A U.S. bailout could come with the expectation, explicit or otherwise, that Argentina reduce China’s footprint in this sector. But such a shift would be difficult to implement. Lithium extraction falls largely under provincial jurisdiction, not presidential control. In provinces such as Jujuy, Chinese cooperation with local geological agencies dates back over a decade, embedding Beijing’s presence deeply into local economies. Any effort to dislodge it would likely face political, legal, and economic resistance.
Taking back Patagonia
A second, more sensitive issue is the Espacio Lejano deep-space observation station in Patagonia. The 50-year lease agreement between Argentina and China does not clearly limit the site to civilian use, raising concerns in Washington about potential dual-use functions given China’s military-managed space program.
Milei’s ability to revisit this deal is constrained, as the agreement had the approval of the Argentinian Congress Chamber of Deputies, although by a very thin margin (133 in favor, 107 against) in 2015.
This means that any action to revisit the status of the space station would require legislative support.
This context may explain Trump’s recent statement linking the bailout to Argentina’s midterm elections, which reshaped the balance of power in the legislature. With Milei’s party, La Libertad Avanza, outperforming expectations, he now enjoys greater room to maneuver on strategic issues such as Espacio Lejano.
The Broader Strategic Landscape
There is an ideological component behind the U.S. bailout, for sure, but there is also a strategic one. Other than the Panama Canal, the Strait of Magellan is the only other secured maritime route connecting the Atlantic and the Pacific oceans. With tensions rising over CK Hutchison’s control over Panama ports of Balboa and Cristobal, the Strait of Magellan has become another important theater in the U.S.-China strategic competition.
In 2023, there were reports of a Chinese firm looking to establish a port near the Argentinian entrance to the strait. This, together with China’s presence in Espacio Lejano, spurred secret military dialogues between the U.S., the British, and the Argentinians to counter China, which even included some sort of cooperation through the Falklands/Malvinas islands, a very delicate subject in Argentina.
Beijing’s Lingering Leverage
For China, there are still many areas where it can leverage Argentina. Agricultural commodities are among these, with soybeans, corn, and beef exports leading the list. For example, as a result of the current trade war, Argentinian soybean exports to China have soared to a seven-year high. This means that many people in the Argentinian business community could suffer the consequences if, as a reprisal, China decides to stop buying soybeans. Suffice to say that U.S. soybean farmers, who are angered and economically hurt by Trump’s trade war with China, have also criticized the U.S. bailout of Argentina during an ongoing crop crisis.
Beef exports are also part of the equation. Although they only account for 3% of the country’s total exports, beef is widely considered a key component of Argentina’s global trademark. In that regard, there is a degree of strategic dependence that could be leveraged by Beijing, particularly as in the first quarter of 2025, China accounted for 56.4% of Argentina’s total beef exports.
A Shift Worth Watching
Amid the political theatrics and ideological overtones of the U.S. bailout, a broader strategic recalibration may be underway. The credit line is a financial lifeline, yes, but it also represents a new frontier in Washington’s efforts to reassert influence in a region where China’s presence is now deeply entrenched. Given the diversity of political orientations across Latin America, it is not surprising that the Trump administration would choose to begin with a government ideologically aligned and openly receptive to U.S. engagement.
Still, Beijing’s position in Argentina remains robust, spanning lithium extraction, agricultural trade, and strategic infrastructure. Whether Buenos Aires can, or will, pivot fully toward Washington depends as much on domestic constraints as on U.S. expectations. For now, Argentina sits at the intersection of two competing global visions: a frontline in the evolving U.S.-China rivalry playing out across Latin America.
Alonso Illueca is CGSP’s Non-Resident Fellow for Latin America and the Caribbean.
