Argentina industry struggles under Milei import opening

Argentina's manufacturers are struggling after President Javier Milei opened the country to more foreign competition by dismantling trade protections.

Kioshi, a footwear maker in the south of Buenos Aires, employed nearly 120 people and produced 40,000 pairs of sneakers and flip-flops a month three years ago. It now has 14 workers and produces about a quarter of that amount, according to company director Emmanuel Fernandez.

Milei began removing import quotas, taxes and other trade restrictions in 2024 as part of his effort to lower prices. Fernandez said the changes had brought an “avalanche” of imports and that weak consumer demand had added to the pressure on local producers.

Around 40% of Argentina's industrial capacity was idle in June. Manufacturing output fell 5% between June and July, the sharpest fall in 16 months.

The Argentine Industrial Union has demanded government action, citing the loss of about 90,000 industrial jobs and the closure of nearly 30,000 companies in the past three years.

Milei's government says the disruption is part of a transition toward a more competitive economy. “Companies disappear in the same way they appear, it's a natural phenomenon,” Milei said.

Economy Minister Luis Caputo defended opening national industry to competition, saying his role was “to defend the interests of 48 million Argentines, not those of certain business owners.”

Industrialists argue that an artificially strong peso, high interest rates and taxes have made it difficult to compete with cheaper imports. They also say job losses and weaker purchasing power have reduced domestic demand.

Other small manufacturers have also cut back. Martin Blunt, a company that makes strings for musical instruments in the northern suburbs of Buenos Aires, has moved to a four-day week because of falling demand, co-director Gloria Aparicio said.