Looking at their hairstyles, social media and tactics against opponents, Donald Trump and Argentine President Javier Milei appear to be cut from the same cloth. But style and substance are two different things.
The South American leader – with a chainsaw on his desk – has demonstrated an almost monomaniacal determination to cut expenses, chewing through Argentina’s social security net, putting his political popularity at risk. On the other hand, the US president-elect has avoided talking about deficit reduction actions that could change the fiscal situation, such as reviewing Social Security, Medicare or defense spending.
Instead, Trump appointed Elon Musk and Vivek Ramaswamy to find ways to save money. The Office of Government Efficiency, or DOGE, is focusing primarily on departments that could be closed or downsized, although experts say serious deficit reduction would require much more draconian measures.
Both Trump and Milei aim to deregulate and reduce government bureaucracy, and Ramaswamy boasted on X that he has “a reasonable formula for fixing the US government: Milei-style cuts, on steroids.” But DOGE is unlikely to actually imitate Milei’s widespread austerity, in part because the US and Argentina are in very different economic situations.
“People make a lazy analogy with Milei and Trump,” said Alejo Czerwonko, UBS’s chief investment officer for emerging markets in the Americas. “On the surface, they may have similarities. But in reality, under the hood, the specific aspects that each of them proposes are diametrically opposed.”
READ MORE: Difference between official and parallel Argentine peso drops to less than 10% with Milei
In Milei’s ten-month term, the chainsaw saw his government halt almost 79% of public works spending and cut pension expenses by 21.4%, according to local brokerage PPI. He reduced the size of 12 ministries, cut more than 30,000 government jobs and reduced funding for public hospitals and schools. On the revenue side, Milei increased some taxes to close the fiscal deficit.
Trump, who held an “infrastructure week” during his first term, did not propose any spending cuts on pensions, public works or health care. While Milei cuts Argentina’s fiscal deficit, Trump’s proposals — including tax cuts — are expected to increase the U.S. federal deficit by $3 trillion over 10 years, according to an October analysis by the Tax Foundation.
“In Milei’s case, there is an obsession with eliminating the fiscal deficit,” said Alberto Ades, director of investment consultancy firm NWI Management. In the US, “Republicans have a different attitude: Cut taxes first and ask questions later.”
Although Milei claims he is implementing the largest austerity campaign in human history, Trump continued to overspend during his first term. The US fiscal deficit grew to 4.7% of gross domestic product at the end of 2019, up from 3.05% during Trump’s first two years in office, shortly before pandemic spending left the deficit out of proportion. control, reaching 15.2% at the end of 2020. Milei inherited a deficit of 2.7% in 2023 and turned it into a surplus of more than 1% so far this year.
Trump is already threatening to impose heavy tariffs on goods from Mexico, Canada and China, which economists warn could trigger a new wave of inflation in the US. Meanwhile, Milei is reducing tariffs in one of the world’s most protectionist countries to control triple-digit inflation. On Monday, Argentine authorities removed tariffs on imports worth up to $400 for individual consumers. He is also pursuing free trade agreements with the US and the European Union.
“Trump is naturally and ideologically protectionist,” Ades said. “Milei isn’t.”
READ MORE: Milei Effect: Investors see lower risk of Argentina defaulting
A big difference between the two will be the amount of legislative support they can count on. “Milei has a small representation in Congress and was forced to negotiate each initiative with other political parties,” said Fernando Losada, managing director of Oppenheimer. In the US, the Republican Party “will have complete control of both houses of Congress”, meaning that Trump will likely face fewer obstacles than Milei.
Some economists note that Trump and Milei’s economic plans are likely to diverge due to the different trajectories of the US and Argentina. Trump should take office with low unemployment, consistent growth and cooled inflation after the post-pandemic increase. Milei, on the other hand, inherited a full-blown economic crisis that required drastic policy changes to avoid hyperinflation.
Politics, not legislation, will keep Milei and Trump aligned, according to Pilar Tavella, head of research at Buenos Aires-based brokerage Balanz Capital Valores SA.
Perhaps it’s no surprise that Milei is set to host an event in Buenos Aires on Wednesday, where speakers include Republican National Committee co-chair Lara Trump, the president-elect’s daughter-in-law.
“There are differences in tax and trade policies, but they are also very different countries that respond to very different economic contexts,” said Tavella. “Milei wants to align with the Western world, just like Trump. And that is what is most relevant.”
