The Trump administration wants to work with traditional allies to secure new supplies of critical minerals. But months of aggression toward allies, culminating with since-aborted threats to seize Greenland, have left many cool to the overtures. While the State Department has drawn a lengthy list of participating countries for its first Critical Minerals Ministerial scheduled for Wednesday, a number of those attending are hesitant to commit to partnering with the U.S. in creating a supply chain that bypasses China’s current chokehold on those materials, according to five Washington-based diplomats of countries invited to or attending the event. State Department cables obtained by POLITICO also show wariness among some countries about signing onto a framework agreement pledging joint cooperation in sourcing and processing critical minerals. Representatives from more than 50 countries are expected to attend the meeting, according to the State Department — all gathered to discuss the creation of tech supply chains that can rival Beijing’s. But the meeting comes just two weeks since President Donald Trump took to the stage at Davos to call on fellow NATO member Denmark to allow a U.S. takeover of Greenland, and that isn’t sitting well. “We all need access to critical minerals, but the furor over Greenland is going to be the elephant in the room,” said a European diplomat. In the immediate run-up to the event there’s “not a great deal of interest from the European side,” the person added. The individual and others were granted anonymity to discuss sensitive diplomatic relationships. Their concerns underscore how international dismay at the Trump administration’s foreign policy and trade actions may kneecap its other global priorities. The Trump administration had had some success over the past two months rallying countries to support U.S. efforts to create secure supply chains for critical minerals, including a major multilateral agreement called the Pax Silica Declaration. Now those gains could be at risk. Secretary of State Marco Rubio wants foreign countries to partner with the U.S. in creating a supply chain for the 60 minerals (including rare earths) that the U.S. Geological Survey deems “vital to the U.S. economy and national security that face potential risks from disrupted supply chains.” They include antimony, used to produce munitions; samarium, which goes into aircraft engines; and germanium, which is essential to fiber-optics. The administration also launched a $12 billion joint public-private sector “strategic critical minerals stockpile” for U.S. manufacturers, a White House official said Monday. Trump has backed away from his threats of possibly deploying the U.S. military to seize Greenland from Denmark. But at Davos he demanded “immediate negotiations” with Copenhagen to transfer Greenland’s sovereignty to the U.S. That makes some EU officials leery of administration initiatives that require cooperation and trust. “We are all very wary,” said a second European diplomat. Rubio’s critical minerals framework “will not be an easy sell until there is final clarity on Greenland.” Trump compounded the damage to relations with NATO countries on Jan. 22 when he accused member country troops that deployed to support U.S. forces in Afghanistan from 2001 to 2021 of having shirked combat duty. “The White House really messed up with Greenland and Davos,” a third European diplomat said. “They may have underestimated how much that would have an impact.” The Trump administration needs the critical minerals deals to go through. The U.S. has been scrambling to find alternative supply lines for a group of minerals called rare earths since Beijing temporarily cut the U.S. off from its supply last year. China — which has a near-monopoly on rare earths — relented in the trade truce that Trump brokered with China’s leader Xi Jinping in South Korea in October. The administration is betting that foreign government officials that attend Wednesday’s event also want alternative sources to those materials. “The United States and the countries attending recognize that reliable supply chains are indispensable to our mutual economic and national security and that we must work together to address these issues in this vital sector,” the State Department statement said in a statement. The administration has been expressing confidence that it will secure critical minerals partnerships with the countries attending the ministerial, despite their concerns over Trump’s bellicose policy. “There is a commonality here around countering China,” Ruth Perry, the State Department’s acting principal deputy assistant secretary for ocean, fisheries and polar affairs, said at an industry event on offshore critical minerals in Washington last week. “Many of these countries understand the urgency.” Speaking at a White House event Monday, Interior Secretary Doug Burgum indicated that 11 nations would sign on to a critical minerals framework with the United States this week and another 20 are considering doing so. Greenland has rich deposits of rare earths and other minerals. But Denmark isn’t sending any representatives to the ministerial, according to the person familiar with the event’s planning. Trump said last month that a framework agreement he struck with NATO over Greenland’s future included U.S. access to the island’s minerals. Greenland’s harsh climate and lack of infrastructure in its interior makes the extraction of those materials highly challenging. Concern about the longer term economic and geostrategic risks of turning away from Washington in favor of closer ties with Beijing — despite the Trump administration’s unpredictability — may work in Rubio’s favor on Wednesday. “We still want to work on issues where our viewpoints align,” an Asian diplomat said. “Critical minerals, energy and defense are some areas where there is hope for positive movement.” State Department cables obtained by POLITICO show the administration is leaning on ministerial participants to sign on to a nonbinding framework agreement to ensure U.S. access to critical minerals. The framework establishes standards for government and private investment in areas including mining, processing and recycling, along with price guarantees to protect producers from competitors’ unfair trade policies. The basic template of the agreement being shared with other countries mirrors language in frameworks sealed with Australia and Japan and memorandums of understanding inked with Thailand and Malaysia last year. Enthusiasm for the framework varies. The Philippine and Polish governments have both agreed to the framework text, according to cables from Manila on Jan. 22 and Warsaw on Jan. 26. Romania is interested but “proposed edits to the draft MOU framework,” a cable dated Jan. 16 said. As of Jan. 22 India was noncommittal, telling U.S. diplomats that New Delhi “could be interested in exploring a memorandum of understanding in the future.” European Union members Finland and Germany both expressed reluctance to sign on without clarity on how the framework aligns with wider EU trade policies. A cable dated Jan. 15 said Finland “prefers to observe progress in the EU-U.S. discussions before engaging in substantive bilateral critical mineral framework negotiations.” Berlin also has concerns that the initiative may reap “potential retaliation from China,” according to a cable dated Jan. 16. Trump’s threats over the past two weeks to impose 100 percent tariffs on Canada for cutting a trade deal with China and 25 percent tariffs on South Korea for allegedly slow-walking legislative approval of its U.S. trade agreement are also denting enthusiasm for the U.S. critical minerals initiative. Those levies “have introduced some uncertainty, which naturally leads countries to proceed pragmatically and keep their options open,” a second Asian diplomat said. There are also doubts whether Trump will give the initiative the long-term backing it will require for success. “There’s a sense that this could end up being a TACO too,” a Latin American diplomat said, using shorthand for Trump’s tendency to make big threats or announcements that ultimately fizzle. Analysts, too, argue it’s unlikely the administration will be able to secure any deals amid the fallout from Davos and Trump’s tariff barrages. “We’re very skeptical on the interest and aptitude and trust in trade counterparties right now,” said John Miller, an energy analyst at TD Cowen who tracks critical minerals. “A lot of trading partners are very much in a wait-and-see perspective at this point saying, ‘Where’s Trump really going to go with this?’” And more unpredictability or hostility by the Trump administration toward longtime allies could push them to pursue critical mineral sourcing arrangements that exclude Washington. “The alternative is that these other countries will go the Mark Carney route of the middle powers, cooperating among themselves quietly, not necessarily going out there and saying, ‘Hey, we’re cutting out the U.S.,’ but that these things just start to crop up,” said Jonathan Czin, a former China analyst at the CIA now at the Brookings Institution. “Which will make it more challenging and allow Beijing to play divide and conquer over the long term.” Felicia Schwartz contributed to this report.

President Donald Trump backed down from the most extreme “Liberation Day” tariffs after bond traders revolted at the prospect of economic upheaval. Now, his push to coerce Denmark into ceding Greenland has threatened to trigger a similar market rout. Bond yields spiked and stocks sank on Tuesday as investors reckoned with how Trump’s threat to impose new tariffs on Europe could hammer alliances that are critical to the global economy. That reignited fears that the “Sell America” trade that dominated market narratives last spring could reemerge, undercutting Wall Street’s hopes for U.S. assets in 2026. As global leaders and top financial CEOs gathered in Davos for the World Economic Forum, where Trump is scheduled to speak on Wednesday, the blowback from bond traders threatened to undermine the president’s bullish case for both the U.S. economy and its market outlook. “The narrative just won’t go away,” said Paul Christopher, head of global investment strategy at the Wells Fargo Investment Institute. Foreign investors flooded back into U.S. assets as tensions eased during the latter half of 2025, but now “they’re hedging because they’re not sure what Trump is going to do with tariffs next.” Trump has historically been highly sensitive to how the bond market responds to his policies, and he regularly cites the stock market’s surge as evidence of how his agenda is working. The latest turmoil has echoes of the volatility that hit global bond markets shortly after he announced eye-popping tariffs last April on dozens of trading partners at a White House press conference. The president later announced a temporary pause on the new import duties after the bond market started “getting a little bit yippy,” in his words. His threat on Saturday to impose more tariffs on Europe sparked a similar response. The Dow Jones Industrial Average fell by more than 870 points on Tuesday. The Nasdaq and S&P 500 both closed down by more than 2 percent — erasing the gains notched through the first three weeks of the year. Yields on the 10-year and 30-year Treasury securities — which are benchmark rates for consumer and corporate lending products — jumped to their highest levels since last September, and the dollar sank. The president warned that he would impose additional 10 percent tariffs on eight European countries that have sought to block his ambitions to acquire Greenland, the sparsely populated Danish territory that’s been a fixation of the president since his first term. French President Emmanuel Macron has said he’s planning to activate the EU’s so-called trade bazooka — the Anti-Coercion Instrument — to respond to Trump’s saber rattling. That would allow the EU to impose restrictions on investment and access to public procurement schemes, as well as limits on intellectual property protection. The White House pushed back on the notion that the markets were rejecting Trump’s policies. “The S&P 500 is up over 10 percent and 10-year Treasury bond yields are down nearly 30 basis points over the past year because the markets have confidence in the Trump administration’s pro-growth, pro-business policies,” White House spokesperson Kush Desai said. “Accelerating GDP growth, cooled inflation, and over a dozen historic trade deals all prove that this Administration continues to deliver for American workers and companies.” Banking leaders — including Bank of America CEO Brian Moynihan, Citi’s Jane Fraser and State Street’s Ron O’Hanley — signaled optimism at the U.S.’s economic outlook in separate media appearances in Davos as they urged government leaders to find a resolution. “Let the people go to work,” Moynihan told CNBC. “They’re here in this beautiful place, and they’ve got a week to a few days to work on it. So, give them 48 hours and see if they can come up with solutions.” Throughout his first year back in the White House, Trump’s costly tariffs and insistence that Europe do more to finance its own defense have caused economic disruption and forced leaders across the continent to reckon with the possibility that the U.S. is no longer as strong a partner as it once was. And while markets have grown increasingly confident that the president’s frequent escalations result in policies that are far less severe than his initial threats, finding an off-ramp in the fight over Greenland’s future could prove challenging. “The market’s very complacent to the idea that this is just a negotiating tool,” said Brij Khurana, a fixed-income portfolio manager at Wellington Management. “I’m more nervous about it because I don’t, I don’t see what the middle ground is here.” In an appearance on Fox Business from Davos on Tuesday, Treasury Secretary Scott Bessent said it’s “very difficult to disaggregate” the market’s reaction to Trump’s Greenland push from a massive sell-off in Japanese bonds that was triggered by mounting concerns about the country’s fiscal trajectory. As European leaders consider taking steps to retaliate against Trump, Bessent urged caution. “Sit back, take a deep breath, do not retaliate,” he said. “The president will be here tomorrow, and he will get his message across.” Aiden Reiter contributed to this report.

Listen on * Spotify * Apple Music * Amazon Music Der Kanzler ist zu seiner ersten Asienreise im Amt in Indien. In Gujarat trifft er Narendra Modi. Es geht um Rohstoffe, Rüstung, Fachkräfte und die strategische Abgrenzung von China. Hans von der Burchard ordnet ein, warum Indien für diese Bundesregierung an Bedeutung gewinnt und wo die politischen und wirtschaftlichen Fallstricke liegen. Im 200-Sekunden-Interview erklärt Sebastian Roloff, wirtschaftspolitischer Sprecher der SPD, welche Erwartungen die Koalition an die Indienreise knüpft und warum Deutschland bei Rüstungsdeals und Russlandfragen nur begrenzt Druck ausüben kann. Die Machthaber-Folge über Narendra Modi findet ihr hier. Parallel reisen Außen- und Finanzminister in die andere Richtung. Johann Wadephul und Lars Klingbeil sind in Washington. Dort geht es um Grönland, erneut Russland und vor allem um Seltene Erden. Rasmus Buchsteiner erläutert, warum die Gespräche über Rohstoffe für die deutsche Industrie strategisch entscheidend sind und wie schwierig der Versuch ist, Abhängigkeiten von China zu reduzieren. Das Berlin Playbook als Podcast gibt es jeden Morgen ab 5 Uhr. Gordon Repinski und das POLITICO-Team liefern Politik zum Hören – kompakt, international, hintergründig. Für alle Hauptstadt-Profis: Der Berlin Playbook-Newsletter bietet jeden Morgen die wichtigsten Themen und Einordnungen. Jetzt kostenlos abonnieren. Mehr von Host und POLITICO Executive Editor Gordon Repinski: Instagram: @gordon.repinski | X: @GordonRepinski. POLITICO Deutschland – ein Angebot der Axel Springer Deutschland GmbH Axel-Springer-Straße 65, 10888 Berlin Tel: +49 (30) 2591 0 information@axelspringer.de Sitz: Amtsgericht Berlin-Charlottenburg, HRB 196159 B USt-IdNr: DE 214 852 390 Geschäftsführer: Carolin Hulshoff Pol, Mathias Sanchez Luna

Donald Trump wants the U.S. to own Greenland. The trouble is, Greenland already belongs to Denmark and most Greenlanders don’t want to become part of the U.S. While swooping into Greenland’s capital, Nuuk, and taking over Venezuela-style seems fanciful ― even if the military attack on Caracas seems to have provided a jolt to all sides about what the U.S. is capable of ― there’s a definite pathway. And Trump already appears to be some way along it. Worryingly for the Europeans, the strategy looks an awful lot like Vladimir Putin’s expansionist playbook. POLITICO spoke with nine EU officials, NATO insiders, defense experts and diplomats to game out how a U.S. takeover of the mineral-rich and strategically important Arctic island could play out. “It could be like five helicopters … he wouldn’t need a lot of troops,” said a Danish politician who asked for anonymity to speak freely. “There would be nothing they [Greenlanders] could do.” STEP 1: INFLUENCE CAMPAIGN TO BOOST GREENLAND’S INDEPENDENCE MOVEMENT Almost immediately upon taking office, the Trump administration began talking up independence for Greenland, a semi-autonomous territory of the Kingdom of Denmark. An unshackled Greenland could sign deals with the U.S., while under the status quo it needs Copenhagen’s approval. To gain independence, Greenlanders would need to vote in a referendum, then negotiate a deal that both Nuuk and Copenhagen must approve. In a 2025 opinion poll, 56 percent of Greenlanders said they would vote in favor of independence, while 28 percent said they would vote against it. Americans with ties to Trump have carried out covert influence operations in Greenland, according to Danish media reports, with Denmark’s security and intelligence service, PET, warning the territory “is the target of influence campaigns of various kinds.” Felix Kartte, a digital policy expert who has advised EU institutions and governments, pointed to Moscow’s tactics for influencing political outcomes in countries such as Moldova, Romania and Ukraine. “Russia mixes offline and online tactics,” he said. “On the ground, it works with aligned actors such as extremist parties, diaspora networks or pro-Russian oligarchs, and has been reported to pay people to attend anti-EU or anti-U.S. protests. “At the same time, it builds large networks of fake accounts and pseudo-media outlets to amplify these activities online and boost selected candidates or positions. The goal is often not to persuade voters that a pro-Russian option is better, but to make it appear larger, louder and more popular than it really is, creating a sense of inevitability.” Stephen Miller, Trump’s deputy chief of staff, told CNN on Monday that “nobody is going to fight the U.S. militarily over the future of Greenland.” | Joe Raedle/Getty Images On Greenland, the U.S. appears to be deploying at least some of these methods. Stephen Miller, Trump’s deputy chief of staff, told CNN on Monday that “nobody is going to fight the U.S. militarily over the future of Greenland.” Last month, Trump created the position of special envoy to Greenland and appointed Louisiana Governor Jeff Landry to the role. He declared his goal was to “make Greenland a part of the U.S.”  Meanwhile, U.S. Vice President JD Vance, on a visit to the territory in March, said “the people of Greenland are going to have self-determination.” He added: “We hope that they choose to partner with the United States, because we’re the only nation on Earth that will respect their sovereignty and respect their security.” STEP 2: OFFER GREENLAND A SWEET DEAL Assuming its efforts to speed up Greenland’s independence referendum come to fruition, and the territory’s inhabitants vote to leave Denmark behind, the next step would be to bring it under U.S. influence. One obvious method would be to fold Greenland into the U.S. as another state — an idea those close to the president have repeatedly toyed with. Denmark’s Prime Minister Mette Frederiksen was on Monday forced to say that “the U.S. has no right to annex” Greenland after Katie Miller — the wife of Stephen Miller — posted to social media a map of the territory draped in a U.S. flag and the word “SOON.” A direct swap of Denmark for the U.S. seems largely unpalatable to most of the population. The poll mentioned above also showed 85 percent of Greenlanders oppose the territory becoming part of the U.S., and even Trump-friendly members of the independence movement aren’t keen on the idea. But there are other options. Reports have circulated since last May that the Trump administration wants Greenland to sign a Compact of Free Association (COFA) — like those it currently has with Micronesia, the Marshall Islands and Palau. Under the deals, the U.S. provides essential services, protection and free trade in exchange for its military operating without restriction on those countries’ territory. The idea resurfaced this week. Kuno Fencker, a pro-independence Greenlandic opposition MP who attended Trump’s inauguration and met with Republican Congressman Andy Ogles last year, said he tries to “explain to [the Americans] that we don’t want to be like Puerto Rico, or any other territory of the United States. But a Compact of Free Association, bilateral agreements, or even opportunities and other means which maybe I can’t imagine — let them come to the table and Greenlanders will decide in a plebiscite.” Compared to Nuuk’s deal with Copenhagen, things “can only go upwards,” he said.  Referring to Trump’s claim that the U.S. has a “need” for Greenland, Fencker added: “Denmark has never said that they ‘needed’ Greenland. Denmark has said that Greenland is an expense, and they would leave us if we become independent. So I think it’s a much more positive remark than we have ever seen from Denmark.” But Thomas Crosbie, an associate professor of military operations at the Royal Danish Defense College that provides training and education for the Danish defense forces, warned that Greenland is unlikely to get the better of Trump in a negotiation. “Trump’s primary identity as a deal-maker is someone who forces his will on the people he’s negotiating with, and someone who has a very long track record of betraying people who he’s negotiated deals with, not honoring his commitments, both in private and public life, and exploiting those around him … I really see zero benefits to Greenlandic people other than a very temporary boost to their self esteem.” And, he added, “it would be crazy to agree to something in the hope that a deal may come. I mean, if you give away your territory in the hopes that you might get a deal afterwards — that would be just really imprudent.” STEP 3: GET EUROPE ON BOARD Europe, particularly Denmark’s EU allies, would balk at any attempt to cleave Greenland away from Copenhagen. But the U.S. administration does have a trump card to play on that front: Ukraine. As peace negotiations have gathered pace, Kyiv has said that any deal with Putin must be backed by serious, long-term U.S. security guarantees. Meanwhile, U.S. Vice President JD Vance, on a visit to the territory in March, said “the people of Greenland are going to have self-determination.” | Pool photo by Tom Brenner vis Getty Images The Americans have prevaricated on that front, and in any case, Kyiv is skeptical about security guarantees, given those it has received from both Russia and the West in the past have amounted to nothing. One potential scenario an EU diplomat floated would be a security-for-security package deal, under which Europe gets firmer assurances from the Trump administration for Ukraine in exchange for an expanded role for the U.S. in Greenland. While that seems like a bitter pill, it could be easier to swallow than the alternative, annoying Trump, who may retaliate by imposing sanctions, pulling out of peace negotiations — or by throwing his weight behind Putin in negotiations with Ukraine. STEP 4: MILITARY INVASION But what if Greenland — or Denmark, whose “OK” Nuuk needs to secede — says no to Trump? A U.S. military takeover could be achieved without much difficulty.  Crosbie, from the Royal Danish Defense College, said Trump’s strategists are likely presenting him with various options. “The most worrisome would be a fait accompli-type strategy, which we see a lot and think about a lot in military circles, which would be simply grabbing the land the same way Putin tried to grab, to make territorial claims, over Ukraine. He could just simply put troops in the country and just say that it’s American now … the United States military is capable of landing any number of forces on Greenland, either by air or by sea, and then claiming that it’s American territory.” According to Lin Mortensgaard, a researcher at the Danish Institute for International Studies and an expert on Greenlandic security, Washington also has around 500 military officers, including local contractors, on the ground at its northern Pituffik Space Base and just under 10 consulate staff in Nuuk. That’s alongside roughly 100 National Guard troops from New York who are usually deployed seasonally in the Arctic summer to support research missions.  Greenland, meanwhile, has few defenses. The population has no territorial army, Mortensgaard said, while Denmark’s Joint Arctic Command in the capital includes scant and out-of-date military assets, largely limited to four inspection and navy vessels, a dog-sled patrol, several helicopters and one maritime patrol aircraft. As a result, if Trump mobilizes the U.S. presence on the ground — or flies in special forces — the U.S. could seize control of Nuuk “in half an hour or less,” Mortensgaard said. “Mr. Trump says things and then he does them,” said Danish Member of European Parliament Stine Bosse. “If you were one of 60,000 people in Greenland, you would be very worried.” Any incursion would have no “legal basis” under U.S. and international law, said Romain Chuffart, who heads the Washington, D.C.-based Arctic Institute, a security think tank. Any occupation beyond 60 days would also require approval from the U.S. Congress.  Meanwhile, an invasion would “mean the end of NATO,” he said, and the “U.S. would be … shooting itself in the foot and waving goodbye to an alliance it has helped create.” Beyond that, a “loss of trust by key allies … could result in a reduction in their willingness to share intelligence with the U.S. or a reduction in access to bases across Europe,” said Ben Hodges, a former commander of U.S. troops in Europe. “Both of these would be severely damaging to America’s security.” Reports have circulated since last May that the Trump administration wants Greenland to sign a Compact of Free Association (COFA) — like those it currently has with Micronesia, the Marshall Islands and Palau. | Joe Raedle/Getty Images NATO would be left unable to respond, given that military action must be approved unanimously and the U.S. is the key member of the alliance, but European allies could deploy troops to Greenland via other groupings such as the U.K.-Scandinavian Joint Expeditionary Force or the five-country Nordic Defence Cooperation format, said Ed Arnold, a senior fellow at the Royal United Services Institute. But for now, NATO allies remain cool-headed about an attack. “We are still far from that scenario,” said one senior alliance diplomat. “There could be some tough negotiations, but I don’t think we are close to any hostile takeover.” Max Griera, Gerardo Fortuna and Seb Starcevic contributed reporting.

The Trump administration is lashing out at foreign laws aimed at clamping down on online platforms that have gained outsized influence on people’s attention — while trying to avoid launching new trade wars that could threaten the U.S. economy. Over the past month, U.S. officials have paused talks on a tech pact with the United Kingdom, canceled a trade meeting with South Korean officials and issued veiled threats at European companies over policies they believe unfairly penalize U.S. tech giants. Several tech policy professionals and people close to the White House say the recent actions amount to a “negotiating tactic,” in the words of one former U.S. trade official. As talks continue with London, Brussels and Seoul, the Office of the U.S. Trade Representative is pressing partners to roll back digital taxes on large online platforms and rules aimed at boosting online privacy protections — measures U.S. officials argue disproportionately target America’s tech behemoths. “It’s telegraphing that we’ve looked at this deeply, we think there’s a problem, we’re looking at tools to address it and we’re looking at remedies if we don’t come to an agreement,” said Everett Eissenstat, who served as the director of the National Economic Council in Trump’s first term. “It’s not an unprecedented move, but naming companies like that and telegraphing that we have targets, we have tools, is definitely meaningful.” But so far, the administration has shied away from new tariffs or other aggressive actions that could upend tentative trade agreements or upset financial markets. And the new tough talk may not be enough to placate some American tech companies, who are pressing for action. One possible action, floated by U.S. Trade Representative Jamieson Greer, would be launching investigations into unfair digital trade practices, which would allow the administration to take action against countries that impose digital regulations on U.S. companies. “I would just say that’s the next level of escalation. I think that’s what people are waiting for and looking for,” said a representative from a major tech company, granted anonymity to speak candidly and discuss industry expectations. “What folks are looking for is like action over the tweets, which, we love the tweets. Everyone loves the tweets.” Trump used similar investigations to justify raising tariffs on hundreds of Chinese imports in his first term. But those investigations take time, and it can be years before any increases would go into effect. Greer has also been careful to hedge threats of new trade probes, stressing they are not meant to spiral into a broader conflict. Speaking on CNBC’s “Squawk Box” last week, he floated launching a trade investigation into the EU’s digital policies, but said the goal would be a “negotiated outcome,” not an automatic path to higher tariffs. “I don’t think we’re in a world where we want to have some renewed trade fight or something with the EU — that’s not what we’re talking about,” Greer said. “We want to finish off our deal and implement it,” he continued, referring to the trade pact the partners struck over the summer. Greer also raised the prospect of a trade probe in private talks with South Korea earlier this fall, saying the U.S. might have to resort to such action if the country continues to pursue legislation the administration views as harmful to U.S. tech firms. But a White House official clarified that the U.S. was not yet considering such a “heavy-handed approach.” Even industry officials aren’t certain how aggressive they want the Trump administration to be, acknowledging that if the U.S. escalated its fight with the EU over their tech regulations, it could spark a digital trade war that would ultimately end up harming all of the companies involved, according to a former USTR official, granted anonymity to speak candidly. President Donald Trump has long criticized the tech regulations — pioneered by the European Union and now proliferating around the globe. But he’s made the issue a much more central part of his second-term trade agenda, with mixed results. While Trump’s threat to cut off trade talks with Canada got Prime Minister Mark Carney to rescind their three percent tax on revenue earned by large online platforms, his administration has struggled to make headway with the EU, UK and South Korea in the broader trade negotiations over tariffs. The tentative trade deal the administration reached with the EU over the summer included a commitment from the bloc to address “unjustified digital trade barriers” and a pledge not to impose network usage fees, but left the scope and direction of future discussions largely undefined. The agreement fleshed out with South Korea this fall appeared to go even further, spelling out commitments that regulations governing online platforms and cross-border data flows won’t disadvantage American companies. But none of those governments have so far caved to U.S. pressure to abandon their digital regulations entirely, and the canceled talks and threatening social media posts are a sign of Trump’s growing frustration. “You won’t be surprised to know that what we think is fair treatment and what they think is fair treatment is quite different and I’ve been quite frankly disappointed over the past few months to see zero moderation by the EU,” Greer said Dec. 10 at an event at the Atlantic Council. Last week, Greer’s office amped up the rhetoric further, threatening to take action against major European companies like Spotify, German automation company Siemens and Mistral AI, the French artificial intelligence firm, if the EU doesn’t back off enforcement of its digital rules. The threat came a week after the EU fined X, the company formerly known as Twitter, $140 million for failing to meet EU transparency rules. Greer’s office also canceled a meeting planned for last Thursday with South Korean officials, as South Korean lawmakers introduced new digital legislation and held an explosive hearing on a data breach at Coupang, an American-headquartered e-commerce company whose largest market is in South Korea. The South Korean Embassy denied any relationship between the Coupang hearing and the cancellation of the recent meeting. “Neither Coupang’s data breach, the subsequent investigation by the Korean government, nor the National Assembly’s hearing played a role in the scheduling of the KORUS Joint Committee,” said an embassy official. The canceled meetings and frozen talks are significant — delaying implementation of bare bones trade agreements and investment pledges inked in recent months. But the Trump administration has shown little interest in blowing up the deals its reached and reapplying the steep tariffs it threatened over the summer, which could trigger significant retaliation and, as concerns about affordability and inflation continue to simmer in the U.S., prove politically dicey. Launching trade investigations at USTR or fining specific foreign companies could be a less inflammatory move. “What is happening is that these issues are starting to come to a head,” said Dirk Auer, a Director of Competition Policy International Center for Law & Economics, who focuses on antitrust issues and recently testified before Congress on digital services laws. “At some point the administration has to put up or shut up. They need to put their money where their mouth is. And I think that’s what’s happening right now.” Gabby Miller contributed to this report.

U.S. President Donald Trump’s top envoy to the EU told POLITICO that overregulation is causing “real problems” economically and forcing European startups to flee to America. Andrew Puzder said businesses in the bloc “that become successful here go to the United States because the regulatory environment is killing them.” “Wouldn’t it be great if this part of the world, instead of deciding it was going to be the world’s regulator, decided once again to be the world’s innovators?” he added in an interview at this year’s POLITICO 28 event. “You’ll be stronger in the world and you’ll be a much better trade partner and ally to the United States.” Puzder’s remarks come as the Trump administration launched a series of blistering attacks on Europe in recent days. Washington’s National Security Strategy warned of the continent’s “civilizational erasure” and Trump himself blasted European leaders as “weak” and misguided on migration policy in an interview with POLITICO. Those broadsides have sparked concerns in Europe that Trump could seek to jettison the transatlantic relationship. But Puzder downplayed the strategy’s criticism and struck a more conciliatory note, saying the document was “more ‘make Europe great again’ than it was ‘let’s desert Europe’” and highlighted Europe’s potential as a partner.

BELÉM, Brazil — The Trump administration slammed the door on clean energy. China is sending the message it’s open for business. The signs are not hard to find in the sweltering, dimly lit convention center in the Amazon where delegates from nearly 200 countries are debating the Earth’s future. China’s section of the United Nations climate summit’s main hall features 5-foot-tall poster boards boasting of the country’s battery and electrical projects, from Egypt to Indonesia to Brazil. Corporate “partners” listed on the back wall include CATL, the world’s largest manufacturer of electric car batteries. BYD, the crown jewel of China’s world-leading electric vehicle empire, is an official sponsor of the summit, as is fellow Chinese electric carmaker GWM. Even Chinese President Xi Jinping’s personal brand is on display at the U.N. gathering, known as COP30, which is scheduled to end Friday. Visitors to the Chinese pavilion can find shrink-wrapped copies of books collecting his writings and speeches. Meanwhile, the United States is absent from the summit for the first time ever, as President Donald Trump disavows any participation in addressing a climate crisis that he calls a “hoax.” That’s not just a setback for the planet, climate supporters say. They say it also symbolizes a self-inflicted economic threat, as the U.S. abandons the growing worldwide market for EVs, solar panels, wind turbines and other clean technologies — and cedes it to China. “It’s not about electric power. This is about economic power,” said California Gov. Gavin Newsom, one of the few prominent American politicians at the summit, during a press conference here last week. He said Trump “simply doesn’t understand how enthusiastic President Xi is today that the Trump administration is nowhere to be found at COP30.” China does not yet show any signs that it’s trying to fill the role the U.S. has sometimes played at the annual climate talks: joining with the EU in pushing for all countries to make more ambitious climate commitments. While it has publicly lamented the U.S. exit from the U.N. dialogue, China still describes itself as a developing country and has proposed only modestly ambitious greenhouse gas reduction goals for its own economy. The Chinese are an undeniably major presence in Belém, however — Beijing’s 789 delegates make up the second-largest national contingent at the summit, behind the 3,805 people representing the host country, Brazil, and just ahead of Nigeria, according to an independent analysis of U.N. records. The official U.S. delegation has consisted solely of Sen. Sheldon Whitehouse (D-R.I.), who said the State Department set up impediments to his two-day visit that ended Saturday. Trump’s hostility to clean energy is a turnaround from former President Joe Biden’s administration, which pursued big-spending green policies — backed by protectionist tax rules that irked allies in Europe — in an attempt to compete with Chinese dominance. Some developing countries had welcomed Biden’s assertiveness, saying it offered an alternative to the onerous conditions that often come from accepting Chinese infrastructure and energy assistance. But that option is rapidly fading after Trump signed a Republican-backed law stripping away Biden’s green energy subsidies. “Most of the equipment, we are buying from China,” said an official from an East African government who was granted anonymity to avoid retribution from the Trump administration. “The market has been broken. Under Biden, people were motivated to buy things from the U.S.” Others attending the summit said they believe Trump’s policies will eventually leave the U.S. itself dependent on China as the global energy market shifts to cleaner products. That trend could hollow out the U.S. industrial core, said Nigel Topping, chair of the Climate Change Committee that advises the U.K. government. “It won’t be long before we have a queue of American governors begging BYD to set up electric car factories in the States,” Topping said. FOSSIL FUELS NOT DEAD YET Trump is articulating a starkly different vision: supplying the world’s growing energy demands with U.S. fossil fuels. He has backed up his talk with action, including using trade threats to undermine international climate agreements and pressure countries to buy more American oil and natural gas. The approach seizes on the fact that the U.S. is the world’s top oil and gas producer, a role it was already using for geopolitical advantage during the Biden era. Trump and his aides maintain that switching to green energy sources would only strengthen China’s stranglehold on wind, solar, battery, electric vehicle and rare earth supply chains. “President Trump wasted no time reversing Joe Biden’s Green New Scam, which significantly contributed to the worst inflation crisis in modern American history, drove up energy prices across the country, and stifled economic growth,” White House spokesperson Taylor Rogers said in a statement. “By unleashing American energy, we are strengthening our grid stability, making energy affordable for families and businesses, and protecting our national security.” The White House’s stance contains an inherent bet — that the world is not on the verge of a dramatic pivot to clean energy. “You will hear people go, ‘Well, the U.S. is peddling fossil fuels, and the Chinese are pushing renewables,’” said George David Banks, an international climate aide during Trump’s first term. “Well, yeah, that’s because that’s what we have, and that’s what they have.” Trump’s vision of a future flush with fossil fuels got some validation last week from the Paris-based International Energy Agency, whose recent track record of projecting massive increases in green energy has made it a target of conservatives in Washington. The IEA’s newest forecast includes a much different scenario based on nations’ existing laws that predicts worldwide oil and gas consumption will keep growing through 2050. But the IEA report also includes an alternative scenario — accounting for policies that countries plan to adopt — which envisions a future of rising renewable energy deployment, with fossil fuel use peaking before 2030. The energy think tank Ember said Thursday that wind and solar power expanded quickly enough during the first three quarters of 2025 to meet all the world’s new power demands, and it projected that fossil fuel power generation will not increase this year for the first time since the Covid-19 pandemic. A pledge that countries made at the 2023 U.N. climate summit to triple renewable energy capacity by 2030 appears within reach, Ember said. Wagering the United States’ economic future on the continued dominance of fossil fuels is foolish, former Vice President Al Gore said in an interview in Belém. “It’s a tragedy that Donald Trump has shot the U.S. economy in both feet and hobbled our ability to compete more effectively with China,” Gore said, pointing to Ember’s data showing that green technology exports from China exceed the value of all fossil fuel exports from the U.S. “One sector is an appreciating asset, the other is a diminishing asset, and the U.S. is on the wrong side of that equation.” During the two days of world leaders’ speeches preceding this month’s summit, Chinese Vice Premier Ding Xuexiang took a veiled shot at Trump’s trade and clean energy policies. “China is ready to work with all parties to unswervingly promote green and low-carbon development,” he said. ‘LARGE INVESTMENTS FIRST’ The United States still has a big footprint at COP30, of course — even if the federal government doesn’t. U.S. companies such as GE Vernova, Baker Hughes, Citibank and Bank of America attended the summit, noted Marty Durbin, president of the U.S. Chamber of Commerce’s Global Energy Institute. He said those businesses will pursue clean energy projects regardless of who occupies the White House or whether the president sends anyone to the talks. “Are we winning in that race?” Durbin said before a slight pause. “We’re in the race. And we’re going to continue to be part of that.” But others said they believe Trump’s policies will leave the U.S. in the lurch. While some foreign clean energy companies have exited the U.S. as an immediate response to Trump’s policy reversals, they will avoid the country altogether in the medium and long terms “if you cannot trust in it,” said Anne Simonsen, climate policy head of the business group Danish Industry. At the same time, China is going all in. China has poured huge direct investments into building clean technology and electric vehicle factories in emerging economies. In Brazil, Chinese investment in the electricity sector last year spiked 115 percent to $1.43 billion, with 69 percent of total Chinese-backed projects consisting of green energy and sustainability, according to the Brazil-China Business Council. Rich and poor nations have benefited from Chinese oversupply to buy cut-rate gear to meet clean energy goals. That approach and Chinese investments have transformed economies, said André Aranha Corrêa do Lago, president of the COP30 summit. China “added the elements that I believe were missing” from the world’s green energy transition, Corrêa do Lago said Nov. 10 at a press conference. “One of them is scale. The other is technology. And the other is the fact that as a developing country, it needs to bring solutions that are affordable to more people.” But he acknowledged in a separate interview with POLITICO that while China’s gusher of less-expensive technology could help address climate change more quickly, relying on one supplier creates other complications. China is “indisputably” the leader in all green technology, much of which is high quality, said Juan Carlos Monterrey Gómez, Panama’s climate envoy and chief negotiator. He said U.S. automakers are “shit-scared” that they won’t be able to catch up with Chinese models, a worry that Newsom also espoused in several public comments. As an economist by trade, Monterrey Gómez said he too worries about the world relying so much on one supplier. Still, he said he sees no major alternative at the moment. “They did fast investments, large investments first,” he said. “That’s why they’re benefiting from this.” Sara Schonhardt contributed to this report from Belém, Brazil.

Republicans got a series of warnings this week about President Donald Trump’s trade policies. But even the party’s biggest tariff skeptics doubt it will convince the White House to change course. Democrats can hardly contain their glee. Voters in Virginia, New Jersey and elsewhere flocked to Democratic candidates who hammered the president and his party for stubbornly high prices of everyday goods. It was an implicit — and sometimes explicit— rebuke of Trump’s use of tariffs, which are driving up the cost of coffee, cars, aluminum cans and other foreign imports Americans rely on. A day later, even Trump-appointed justices on the Supreme Court raised doubts about the president’s decision to raise levies, seemingly at will, on the country’s largest trading partners. Put together, it was validation for the retailers, free-market economists and old-school, business-friendly Republicans who have been warning about the potential long-term economic damage of Trump’s tariff regime and GOP prospects in the midterms. But few see much hope in pressing the White House’s self-described Tariff Man to pull back now. “Outside of a court order, he’s going to push the limits,” said Sen. Thom Tillis (R-N.C.), who was one of five GOP senators to vote against the 50 percent tariff Trump slapped on Brazil this summer over diplomatic disputes, which Tillis said outstripped presidential authority. The Supreme Court is now weighing that question vis-a-vis Trump’s moves to hike duties substantially on countries around the world, and Wednesday’s arguments raise the prospects they will strike at least some of them down. In theory, it could give the president an excuse to rein in some of his most controversial tariffs — and help Republicans defend against Democrats’ attacks on affordability. Along with the rest of the world, the U.S. economy has been struggling with inflation since the Covid-19 pandemic, a reality Republicans campaigned on relentlessly in 2022 and 2024. Now some conservatives fear voters are connecting those costs with tariffs — and their party. “I think people see that something’s driving up costs and tariffs are at the front of it,” said a Republican senator, granted anonymity to speak candidly about Tuesday’s election results. “The president is so enamored with tariffs that it’s clearly a Trump-Republican thing, so it has a consequence.” After their shellacking last year, Democrats say their election victories this week only energize plans to turn the table on Republicans in 2026 — making the election a referendum on Trump’s economic policies and how things like tariffs are making daily goods even more unaffordable. Michigan Democrats have been hammering former Republican Rep. Mike Rogers, who’s running for the state’s open Senate seat, for months over tariffs that have rocked their famed auto industry. In New Hampshire, another state that borders Canada, they’re accusing Trump of hurting small businesses. In Kentucky, they’re warning about how his tariffs are strangling the state’s bourbon industry. Nationally, Democrats are heralding Abigail Spanberger’s 14-point win Tuesday night in the Virginia gubernatorial race, in part because she gained support in deep-red central and western parts of the state where manufacturing and agricultural industries have been dented by Trump’s duties. “Tariffs are fundamentally one of the biggest reasons why costs are so high and Americans know that,” said Sam Newton, the communications director for the Democratic Governors Association. “So in many ways, whether candidates are talking about tariffs or not, they’re raising prices in a way that sets the groundwork for Democrats to go on offense on the economy and on affordability.” GOP strategists across battleground states, particularly in places like Michigan and Wisconsin that are home to manufacturing industries bearing the brunt of Trump’s tariffs, are warning that voters’ patience with his turbulent trade policies is wearing thin. “It’s baked into the electorate that doing these tariffs will have some sort of short-term pain, but that we’ll realize some long-term gain,” said Jason Cabel Roe, a Michigan-based GOP strategist and former executive director for the state’s Republican Party who worked on presidential campaigns for Mitt Romney and Marco Rubio. “I don’t know if we’ll realize the benefits the administration anticipates from those tariffs by election time.” The White House has maintained that Trump’s trade policy is ushering in a “golden age” for the U.S. and, even as the administration has acknowledged that there will be short term pain from the tariffs, Trump has spent the past few days dismissing criticism about high prices. “The Trump Administration remains committed to the President’s trade and tariff agenda — an agenda that in mere months has resulted in unprecedented trade deals and trillions in investment commitments to make and hire in America,” said Kush Desai, a deputy press secretary for the White House. “Our America First policies are simultaneously delivering economic relief from Joe Biden’s inflation crisis for the American people while laying the groundwork for a long-term restoration of American Greatness.” Most GOP lawmakers continue to give Trump a wide berth on tariffs, hesitant to publicly knock the president on his go-to policy. “They would say there’s been a benefit, as well, to American production,” said Sen. James Lankford (R-Okla.). “It takes longer because they’re bringing in new contracts and trade negotiations and new trade agreements, so those come along a little later.” But strategists see potential electoral risk in Tuesday’s voter backlash to rising costs and the possibility that the Supreme Court could kick control over tariffs back to Congress — and set Republicans up for more thorny votes that could cost them at the ballot box. Trump acknowledged in a speech in Miami Wednesday that the economy played a big role in this year’s elections — suggesting Republicans aren’t spending enough time talking about his economic success. But he doesn’t appear to be willing to back off the tariffs. “I think that they might be paying something, but when you take the overall impact the Americans are gaining tremendously,” Trump told reporters Wednesday. “They’re gaining through national security — look, I’m ending war because of these tariffs. Americans would have to fight in some of these wars. They are gaining in national security, they are gaining in economics, they’re gaining in so many different ways, and they are gaining self-respect for our own country.” Trump has portrayed his ability to impose tariffs as “life or death” for the economy, but the Supreme Court seemed skeptical that he could override Congress to impose a duty on nearly every country in the world with few guardrails. In oral arguments on Wednesday, several conservative justices questioned whether Trump’s national security argument for imposing tariffs justified his decision to take a core power from the legislative branch. But while a court ruling could make it more difficult to impose tariffs on a whim, Trump and top administration officials have pledged to find other legal routes to raise duties on foreign imports, even if it takes longer or is more cumbersome to enforce. In an interview Thursday on Fox Business Network, U.S. Trade Representative Jamieson Greer said the Trump administration has many other authorities it can use to impose tariffs but declined to say which ones it would use if the president’s authority under the 1977 International Emergency Economic Powers Act are struck down. Business groups and others hit by the tariffs are taking Trump officials at their word. “Obviously the Supreme Court decision is very important, but we also are realists, and we understand that … President Trump has probably several backup plans here,” said Gary Shapiro, the CEO of the Consumer Technology Association, which represents businesses like Amazon, Best Buy and Verizon that rely on complex global supply chains impacted by the tariffs. “This may be a battlefield victory, but I’m not sure … we’ll win [the war].” Stephen Moore, a former Trump economic adviser, said Thursday that Republicans quietly hoping the Supreme Court will offer an escape hatch on tariffs may be disappointed. “One of the problems with the tariff strategy is it’s been a lot of turmoil — uncertainty and turmoil,” said Moore. “And if he loses the court case, I think that would only add to the turmoil in the short term. So I don’t think it’s going to be necessarily a victory for the economy.” Megan Messerly and Caitlin Oprysko contributed to this report.

Listen on * Spotify * Apple Music * Amazon Music Außenminister Wadephul sagt seine China-Reise kurzfristig ab. Ein Vorgang, der zeigt, wie sehr sich die Machtverhältnisse verschoben haben. Hans von der Burchard analysiert, wie China Deutschland die Grenzen aufzeigt, warum die EU zum Vermittler wird  und welche Folgen die Eskalation hat. Im 200-Sekunden-Interview spricht Markus Frohnmaier, außenpolitischer Sprecher der AfD, über Pekings Rolle in der Welt, deutsche Interessen und warum er die Regierung für „hypermoralisch“ hält. Danach: Innenminister Alexander Dobrindt will Deutschland besser gegen Cyberangriffe wappnen und erlaubt künftig auch digitale Gegenschläge. Rixa Fürsen erklärt, wie schwierig das Konzept der Abwehr ist und warum Zuständigkeiten zwischen Bund, Ländern und Bundeswehr so unklar sind. Zum Schluss: Ein Blick auf die SPD, die in Bielefeld gegen den Kanzler und damit die eigene Regierung demonstriert. Das Berlin Playbook als Podcast gibt es jeden Morgen ab 5 Uhr. Gordon Repinski und das POLITICO-Team liefern Politik zum Hören – kompakt, international, hintergründig. Für alle Hauptstadt-Profis: Der Berlin Playbook-Newsletter bietet jeden Morgen die wichtigsten Themen und Einordnungen. Jetzt kostenlos abonnieren. Mehr von Host und POLITICO Executive Editor Gordon Repinski: Instagram: @gordon.repinski | X: @GordonRepinski.

Nearly two years ago, Argentina’s newly appointed punk-haired President Javier Milei stood up on a podium in front of global elites in Davos and accused them of letting their societies drift into socialism and poverty. He went on to argue that the “main leaders of the Western world have abandoned the model of freedom for different versions of what we call collectivism,” and that all market failures were by-products of state intervention. This week, however, Davos had the last laugh: U.S. Treasury Secretary Scott Bessent threw Milei a $20 billion lifeline to help Argentina defend a currency that is collapsing despite nearly two years of shock therapy programs that had had supply-side economists and investors in raptures. “Argentina faces a moment of acute illiquidity,” Bessent posted on X. “The international community — including the IMF — is unified behind Argentina and its prudent fiscal strategy, but only the United States can act swiftly. And act we will.” The rescue act, which many have described as a country-to-country bailout, is an abrupt departure from the usual playbook of international financial diplomacy, an unusually direct intervention in a sphere normally reserved for multilateral institutions. In a strong signal that this was the result of political will, rather than financial apparatchiks just trying to keep the system stable, the money will be directly extended by the Treasury, rather than by the Federal Reserve, in the form of a currency swap. It stands to entangle the fate of the U.S. economy intimately with that of resource-rich Argentina, and tie the Trump administration directly to Milei’s shock therapy programs. At the same time, it reasserts U.S. influence in a region that China has increasingly penetrated through growing trade ties. For Europe, the corollary is that access to dollar liquidity, the essential backstop of the world financial system for nearly a century, is being politicized, and may increasingly depend on how closely its policies align with those of the U.S. “Europe should be concerned about the politicization of the swaps,” one former New York Federal Reserve official told POLITICO. The episode “underscores the need for the rest of the world to prepare for dealing with a dollar crunch without the Fed[to turn to],” added the official, who was granted anonymity to speak freely. CHAINSAW ECONOMIC MASSACRE Milei was explicitly elected in 2023 on the promise that he would take a chainsaw to Argentine government excesses. Positioning himself as the defender of freedom, once in office, he initiated a bold economic agenda focused on radical deregulation, welfare cuts, and liberalization. Within months, the country’s welfare bill had been slashed by nearly half, with the government balancing the books (before interest payments) for the first time since 2008. But it was Milei’s initial move in December 2023 to devalue the official peso exchange rate by nearly 50 percent that rocked markets the most. The hope was to better align the peso with its black market (i.e., real) rate before slowly introducing a floating exchange rate, with sliding bands. Throughout, the International Monetary Fund, the world’s lender of last resort for countries, championed Milei’s policies, which allowed Argentina to return to capital markets earlier than expected. “The agreed ambitious stabilization plan is centered on the establishment of a strong fiscal anchor that ends all central bank financing of the government,” the lender cooed in January 2024. EGG ON THE IMF’S FACE? Except things didn’t go exactly as planned. Rather than stabilize, the peso just kept depreciating, especially after Trump’s tariff announcement in April destabilized global markets. The declines threatened to make imports more expensive for ordinary Argentinians just as Milei’s disinflationary successes were beginning to become entrenched. The road to that point evolved predictably enough. In the immediate aftermath of Milei’s great devaluation, inflation hit 25.5 percent, spiking to 276 percent by February 2025. But, as social welfare cuts began to bite, inflation predictably turned into disinflation. By June 2024, monthly price rises had slowed to 5 percent, and by July-August, inflation had hit single digits for the first time in years. The International Monetary Fund (IMF) and independent observers were quick to credit Milei’s strict fiscal surplus, monetary tightening, and peso stabilization. But by April, the peso’s soft float was proving increasingly challenging to defend. Trump’s “Liberation Day” tariffs, which set a baseline rate of 10 percent for all countries, had hit Argentina’s export-dependent economy hard. Capital started to flow out amid fears that a global slowdown would crush demand for its agricultural and mineral exports. The Argentinian central bank moved to defend the peso, burning through scarce dollar reserves. Markets began to doubt that Milei’s agenda would survive, fearing that a sharp, uncontrolled depreciation would rekindle inflation just as prices were calming down. To avert a currency crisis, Argentina turned to the IMF and was granted $20 billion through the agency’s Extended Fund Facility (EFF). But despite an initial positive impact on the peso, the depreciation picked up speed again. From the perspective of both the IMF and the U.S., the failure of Milei’s reforms stood not just to unravel Argentina once again, but to delegitimize the ideological foundations of the free-market system he had touted as infallible if deployed correctly. PROXY ECONOMIC WAR WITH CHINA As confidence in Milei’s program faltered, focus shifted to whether the U.S. would make dollar support conditional on the cancellation of a pre-existing $18 billion swap line with Beijing. U.S. Special Envoy for Latin America Mauricio Claver-Carone publicly dubbed the facility “extortionate.” In September, Bessent confirmed negotiations between the U.S. and Argentina for a direct dollar swap line, reinforcing speculation that the U.S. was trying to supplant Chinese influence in the region. The news had an immediate positive effect on the peso, breaking its fall. After peaking at over 1,475 pesos, the dollar was back at 1,421 by late Friday in Europe, helped by news that a dollar-support package from Washington was imminent. How long-lasting that effect will be is yet to be determined. For now, Bessent and the IMF appear resolute that it’s just a matter of time until Milei’s policies will deliver the stability they’ve been promising. Rather than framing the U.S. swapline as a bailout, Bessent is treating the intervention as a trading play. “This is not a bailout at all, there’s no money being transferred,” he told Fox News on Thursday. Under a swap line, two parties agree to exchange up to a certain amount of their currencies, on the understanding that it will be reversed at some time in the future. “The ESF has never lost money, it’s not going to lose money here,” Bessent went on, arguing that the peso is “undervalued”. He added that Milei remains a great U.S. ally who is committed to getting China out of Latin America, and said the U.S. was going “to use Argentina as an example.” Not everyone is convinced that Milei’s policies will deliver the goods. “They’ve done this over and over and over again,” said Steve Hanke, a professor at Johns Hopkins University and a veteran of various currency reform and stabilization packages. He argued that the package will provide “a little bit of a temporary band aid, but it won’t last very long.”