The tax burden is simply too high in Argentina. Look at all of these taxes especially at the corporate level. Argentina just is not competitive and too many taxes. Companies will keep closing down. Doom loop.
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New wave of shutdowns and layoffs puts Argentine industry on alert
- Thread starter Pink Panther
- Start date
Very true. Argentina is not competitive and it will take more than the oil and gas industry.
Argentina Hits Record Oil Output — But Can’t Export a Single Car
Let’s look at the numbers.
Oil production: 859,500 barrels per day.
All-time record.
Energy trade surplus: USD 6.0+ billion.
Impressive.
Now look at the rest of the economy:
What do you call that?
An enclave economy.
We export crude oil.
We import the pipes, machinery, and manufactured goods.
Meanwhile:
The peso is strengthening — but not on export earnings.
It’s strengthening on debt inflows.
Borrowed dollars, not productive dollars.
And when debt inflows slow?
The structure becomes fragile.
Other countries protect their industry:
That isn’t a diversified development strategy.
It’s concentration risk.
Oil alone doesn’t build a resilient economy.
Manufacturing depth does.
Argentina Hits Record Oil Output — But Can’t Export a Single Car
Let’s look at the numbers.
Oil production: 859,500 barrels per day.
All-time record.
Energy trade surplus: USD 6.0+ billion.
Impressive.
Now look at the rest of the economy:
- Auto exports: –10.8%
- Auto imports: +97%
- Aluar lost 40% of its U.S. market
- Ford warning about potential factory closures
- Aluar and Ternium among the worst performers on the local index
What do you call that?
An enclave economy.
We export crude oil.
We import the pipes, machinery, and manufactured goods.
Meanwhile:
- Household default rate: 9.3% (up from 2.5% a year ago)
- Textile industry capacity utilization: 29.2% — historic low
- Footwear production: –30.9%
- Nearly 2 million loans in arrears
The peso is strengthening — but not on export earnings.
It’s strengthening on debt inflows.
Borrowed dollars, not productive dollars.
And when debt inflows slow?
The structure becomes fragile.
Other countries protect their industry:
- Brazil imposes heavy tariffs on Chinese textiles.
- The U.S. maintains major steel protections.
- The EU enforces dozens of anti-dumping measures.
That isn’t a diversified development strategy.
It’s concentration risk.
Oil alone doesn’t build a resilient economy.
Manufacturing depth does.
GlasgowJohn
Well-known member
ghost
New member
Debt, debt and more debt.
Very good post. One thing is clear. Argentina is far from out of the woods.
MikeAnton
Active member
But Argentina companies sound like they are losing money. Not sure how they can compete.
Javier Codini, empresario de electrodomésticos: “Los precios no van a bajar, hemos vendido con rentabilidad negativa”
El presidente de Codini advirtió por la falta de competitividad y hasta recordó que existe una investigación por dumping de lavarropas chinos. Por el contexto económico, la empresa ha vendido hasta con márgenes negativos en 2025. La mirada empresarial sobre la reforma laboral.
www.ambito.com
Argentina just doesn't have any business manufacturing tires or many other things. Tires are much more expensive in Argentina vs just importing them. Why should millions of Argentines have to pay more just to employ some people and keep prices high.
Look, let’s stop pretending this is a fair fight. It’s not. It’s an execution.
Argentine tire manufacturers aren't just "struggling"—they are obsolete in a world where Chinese production lines are churning out 50,000 units a day with the ruthless efficiency of a state-backed machine. You’re trying to compete with giants while standing in the mud of high structural costs, bloated taxes, and expensive logistics.
When a finished tire from Asia shows up at the port costing less than the raw rubber Fate or Bridgestone Argentina has to import, the game is over. If you have to import the rubber anyway, you’re just a middleman in a high-cost jurisdiction trying to play industrialist. It’s a vanity project funded by the consumer.
The Brutal Truth:
- Scale is King: You can’t win a volume game against a country that treats global overcapacity like a weapon. Smaller, unspecialized plants are a relic of a closed era.
- The "Raw Material" Delusion: If you don't own the source (the rubber), you own nothing. Importing raw materials just to struggle with local labor costs and exchange rate volatility is a recipe for a slow death.
- Artificial Life Support: Protectionism isn’t a strategy; it’s a sedative. It keeps the industry "alive" while the muscles atrophy. Once the barriers drop, the "adaptation" everyone talks about is usually just liquidation.
The logic of a free open economy is undeniable. Efficiency is the only sustainable reality. Protecting industries that can't compete doesn't save the economy. It just puts a huge "tax" on anyone that needs to buy tires. It forces the entire country to live in a fake reality where prices are high and quality is terrible just to protect some jobs in sectors that refused to face reality.
Just like @CraigM noticed how expensive some things are. It is NOT sustainable.
Argentine factories can never compete. Buy the finished product, take the win on consumer prices, and move the capital to a sector where Argentina actually has a competitive edge. Anything else is just "messing about" while the rest of the world moves on.
earlyretirement
Moderator
Totally agree. It's painful but systemic change is very painful. I was one of the ones that predicted President Milei would win but at the same time I said that I'd probably never see systemic change in my lifetime. Hopefully my kids. Argentina simply can't compete in the manufacturing sector for the most part. There may be some exceptions to the rule but in the next few decades, robots are going to take over the job of what humans are doing in the manufacturing sector. So these jobs will be lost anyway.
Here you can see an interview how an owner of a tire store chain admits they were ripping off Argentine consumers. Just like I don't think there should be many items manufactured in Argentina the same would hold true for what Trump wants with everything being made in the USA. It isn't realistic. If they did that prices would be outrageous just like they were in Argentina.
Piranha
Well-known member
Agree. As far as I'm concerned these companies were living on borrowed time. It would be interesting to see how many of these factory workers voted. I'm told many voted for Milei.
It is strange. I was in an Uber the other day and the driver was complaining about how expensive electricity has become. He was angry. About the price of gas too. I asked him who he voted for and he said Milei. And I told him that this was his entire platform before and he is executing on the things he was going to do. I don't think some locals can put 2 and 2 together.
More and more of these companies will close. Here is another textile fabric that is closing after 100 years.
Luego de 100 años, cerró una importante fábrica textil y más de 200 empleados quedaron en la calle
La empresa alegó que no puede competir con la apertura de importaciones de China y otros países, ni con el contrabando de ropa en el país.
earlyretirement
Moderator
Here is a video as well where he talks about the nosebleed prices they were charging consumers. Again, I feel terrible about the employees but their jobs were on borrowed time.
What I wonder is what will happen when robots take over and humans aren't needed in the factory.Agree. As far as I'm concerned these companies were living on borrowed time. It would be interesting to see how many of these factory workers voted. I'm told many voted for Milei.
It is strange. I was in an Uber the other day and the driver was complaining about how expensive electricity has become. He was angry. About the price of gas too. I asked him who he voted for and he said Milei. And I told him that this was his entire platform before and he is executing on the things he was going to do. I don't think some locals can put 2 and 2 together.
More and more of these companies will close. Here is another textile fabric that is closing after 100 years.
Luego de 100 años, cerró una importante fábrica textil y más de 200 empleados quedaron en la calle
La empresa alegó que no puede competir con la apertura de importaciones de China y otros países, ni con el contrabando de ropa en el país.www.cronista.com
How can a business honestly claim to lose money for 30 years and still stay open? It’s mathematically impossible unless they are playing serious accounting games. It's much more likely that the family has structured the business to shield their assets from the actual mess of operations. If you have separate companies owning the land, the equipment, and the intellectual property while a shell company handles the manufacturing and the labor, you’ve created a perfect safety net. The operating company can run at a slight loss on paper to dodge taxes and lower the stakes of labor disputes, and if things get too heated—like their 2019 bankruptcy—the core assets remain untouched.
They complain about structural disadvantages like high taxes and bad logistics, yet they somehow manage to offer the cheapest tires on the market in certain categories. You can't be a victim of an impossible business environment while simultaneously undercutting global giants. It suggests that they are fully capable of being competitive but are simply unwilling to admit that their days of being a "protected industry" are over.
It's also worth asking why brands like Michelin, Firestone, and Goodyear are consistently cheaper in every other country, even when they aren't produced in China. Argentina has a solid market of 47 million people, and while the taxes are high, they don't fully explain the price gap, especially when those same local companies can sell smaller tires for next to nothing.
The reality is that they’ve had a captive audience for years. They know that if you own a high-end car, you’re probably willing to pay a premium for convenience. They’re betting that you won’t spend your weekend driving ten hours to Chile or Brazil just to save a few hundred dollars. They’ve taken advantage of that calculation for decades, but as the economy finally opens up, that "fake reality" is starting to crumble.
What we’re witnessing right now is the slow, silent death of a commercial illusion, and it should deeply concern anyone looking at the health of the local economy. For years, businesses weren’t actually "competing" more than they were speculating. They front-ran inflation, driving up margins to predatory levels while customers, panicked by the evaporating value of their salaries, bought anything they could just to get rid of their pesos. In that chaos, the concept of a "fair price" simply vanished.
But now the music has stopped. Prices have stabilized, margins have tightened, and the mask is slipping. You can finally see the rot: stores that realistically never had the volume or the logic to exist are totally dead. I just see tons of stores still ignorant and pricing high and empty when they should be lowering their prices.
Both before and after the recent shifts, the vast majority of shops are chronically empty. It’s enough to make you wonder if they’re just fronts for laundering money in black, but the reality might be even more structurally grim.
These businesses are surviving on a "zombie" model. Because some of them own the buildings, don’t finance their inventory, and use unpaid or low-paid family labor, they can linger for an unnerving amount of time on almost zero sales. They are propped up by 100% markups - often double the price of what you find on Mercado Libre—extracting every last cent from the few customers who haven't caught on yet.
This isn't just a temporary slump; it's a systemic collapse of the retail middle class. We are looking at a landscape of empty malls and dead storefronts that only stay open because they have no overhead to force them shut. It’s a recipe for long-term urban decay, and it suggests that the "real" economy is far smaller and more fragile than the storefronts would lead you to believe.
But now the music has stopped. Prices have stabilized, margins have tightened, and the mask is slipping. You can finally see the rot: stores that realistically never had the volume or the logic to exist are totally dead. I just see tons of stores still ignorant and pricing high and empty when they should be lowering their prices.
Both before and after the recent shifts, the vast majority of shops are chronically empty. It’s enough to make you wonder if they’re just fronts for laundering money in black, but the reality might be even more structurally grim.
These businesses are surviving on a "zombie" model. Because some of them own the buildings, don’t finance their inventory, and use unpaid or low-paid family labor, they can linger for an unnerving amount of time on almost zero sales. They are propped up by 100% markups - often double the price of what you find on Mercado Libre—extracting every last cent from the few customers who haven't caught on yet.
This isn't just a temporary slump; it's a systemic collapse of the retail middle class. We are looking at a landscape of empty malls and dead storefronts that only stay open because they have no overhead to force them shut. It’s a recipe for long-term urban decay, and it suggests that the "real" economy is far smaller and more fragile than the storefronts would lead you to believe.
retiredbanker
Member
I think it's fine to use tariffs to give local businesses a fighting chance against global giants. In fact, that’s exactly what Néstor Kirchner did, and it actually helped the country recover during his first term—even if he did end up being incredibly corrupt. The real problem isn't the idea of protection; it's that the government makes it nearly impossible to actually run a business once you’re inside Argentina.
The way forward has to be a double-edged sword: make the country incredibly business-friendly, but keep tariffs in place to protect local workers. This idea of "pure free trade" feels like a scam. You can look at Argentina, or even more recently at Nepal, to see what happens when you open the doors completely -iit just hollows out the country’s own industries.
To fix this, Argentina needs to take a sledgehammer to its tax system and get rid of about 90% of current taxes. They also have to rein in the trade unions so they can’t just shut down a company whenever they feel like it. It would be amazing to actually export manufactured goods for a change, but right now, the red tape and insane regulations make it a miracle just to survive as a business, let alone sell products to the rest of the world.
The way forward has to be a double-edged sword: make the country incredibly business-friendly, but keep tariffs in place to protect local workers. This idea of "pure free trade" feels like a scam. You can look at Argentina, or even more recently at Nepal, to see what happens when you open the doors completely -iit just hollows out the country’s own industries.
To fix this, Argentina needs to take a sledgehammer to its tax system and get rid of about 90% of current taxes. They also have to rein in the trade unions so they can’t just shut down a company whenever they feel like it. It would be amazing to actually export manufactured goods for a change, but right now, the red tape and insane regulations make it a miracle just to survive as a business, let alone sell products to the rest of the world.
Piranha
Well-known member
When you look at the actual numbers, the recent contraction in the textile sector is less of a crisis and more of a necessary economic correction. Yes, over the last 2 years, the industry has shed about 7,500 direct jobs and 20,000 jobs across the broader supply chain. But in the grand scheme of an estimated 550,000+ jobs in that sector, we are only talking about a 3.5% reduction, with a matching dip in factory output.
In exchange for that relatively small contraction, the market has seen a massive influx of imported goods at drastically lower prices for consumers.
If you weigh a 3.5% job loss in one specific industry against the daily financial relief those cheaper goods bring to the other 47 million Argentines, it's a remarkably good trade-off.
The reality is that opening the borders is forcing a long-overdue reckoning. There are plenty of local Argentine brands that already produce high-quality clothing at a fair price point, proving that it is entirely possible to be competitive.
The influx of imports is simply forcing the rest of the industry to finally compete on merit rather than relying on government shielding. The companies that refuse to adapt are going to fail, which strips them of their ability to use protectionist policies to hold the country's consumer base hostage with inflated prices.
Ultimately, this isn't a failure of local industry; it's a free-market policy working exactly as intended to benefit society as a whole.
In exchange for that relatively small contraction, the market has seen a massive influx of imported goods at drastically lower prices for consumers.
If you weigh a 3.5% job loss in one specific industry against the daily financial relief those cheaper goods bring to the other 47 million Argentines, it's a remarkably good trade-off.
The reality is that opening the borders is forcing a long-overdue reckoning. There are plenty of local Argentine brands that already produce high-quality clothing at a fair price point, proving that it is entirely possible to be competitive.
The influx of imports is simply forcing the rest of the industry to finally compete on merit rather than relying on government shielding. The companies that refuse to adapt are going to fail, which strips them of their ability to use protectionist policies to hold the country's consumer base hostage with inflated prices.
Ultimately, this isn't a failure of local industry; it's a free-market policy working exactly as intended to benefit society as a whole.
It really is a fascinating subject when you strip away the political spin. Restricting imports is a tool that should only ever be temporary. It makes perfect sense if a country needs to shield an "infant" industry just long enough for it to stand on its own two feet, safeguard national security manufacturing like weapons, or block predatory dumping designed to artificially wipe out local competition.
But when a government makes those protections permanent, it's no longer about helping businesses grow and it's just neo-mercantilism. It is essentially the exact same economic trap used during the colonial era. Instead of an open market, a territory is bled of its raw materials and then held captive as a consumer base, forced to buy overpriced finished goods exclusively from the "mother country" simply because all other options have been legally blocked.
This is a really interesting thread. I have a thirty thousand foot view of Argentina's economy from watching it over the years but zero on-the-ground knowledge, so I learned an awful lot here. It was inevitable that Argentina's economy would hit the wall, you just never knew when or how it would play out. I just hope they can hang on long enough to get to the other side of this. No doubt it is incredibly painful for locals losing their jobs and businesses.
Uncle Wong
Well-known member
Totally agree. I learn so much on this forum each day. I basically get everything I need or want to know from reading it. I think some people might have biased views because they are only caring how it affects them. But it is good to see both sides of it but most expats seem like they are anti-Milei from reading this and other forums.
And it is not like they want a repeat of Alberto Fernandez but it seems like everyone is comparing it to him. Actually if you just look at Milei, inflation during his term seems to be much worse than Cristina. True inflation on some stuff came down but on other things it is 4 X the cost of before.
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