Anthony Gordon scored in the second half, but the holders got two late goals in Atlanta from Enzo Fernandez and Lautaro Martinez in the 85th and 92nd minutes respectively.
Argentina will face Spain in New Jersey on Sunday.
England will take on France on Saturday in the third-place game.
Meanwhile Argentina celebrated their win over England in a provocative way.
The players took a banner from a supporter that read “The Falkland Islands are Argentine”.
They could face punishment for breaking Fifa rules.
Argentina has long claimed Britain took control of the Falklands in 1833 through an illegal colonial act.
