The factory floor was making a roaring noise.
Walking around his textile factory in southern Buenos Aires, Luciano Galfione points out the state-of-the-art machinery that once 200 workers churned out fabric to be turned into athleisure and other apparel for Argentina’s vast middle class.
But on Monday afternoon, the factory was so quiet that Galfione’s footsteps could be heard clearly across the grounds. Several workers wind thread and dye cloth at the Galfione Group’s factory in Argentina’s capital.
Nearly two years after Liberal President Javier Millay came to power on a promise to rescue Argentina’s crisis-hit economy through tough fiscal austerity and free-market reforms, declining orders and increased competition have forced Mr. Galfione to cut operations by 80%, lay off or furlough half his staff, and dip into his own savings to keep his 78-year-old family’s company afloat.
Other companies simply closed their doors. According to Fundación Pro Tejer, a nonprofit group representing textile manufacturers, more than 17,600 companies have exited in the past year and a half, including 1,800 manufacturers and 380 textile companies.
“The industry is in crisis and on the verge of bankruptcy,” said Galfione, who also runs Fundación Pro Tejer. “It’s not just textiles. Textiles are the very first and fastest to fall.”
Mr. Galfione’s troubles reflect a larger shock shaking the country as Argentina prepares for midterm elections on October 26 that are widely seen as a referendum on Mr. Millei’s policies. The economy is in turmoil. Cheap imports destroyed the manufacturing industry. Consumption is sluggish due to rising unemployment and falling wages.
President Trump rages as Argentines groan
The turmoil engulfing Argentina’s financial markets began when voters in Buenos Aires’ suburban manufacturing belt, an area that for decades symbolized the national industrial dream nurtured by tariff protection, punished Mr. Millay in local elections last month.
The scale of Miley’s humiliation caused the peso to plummet and officials scrambled to secure $20 billion in funding from the friendly Trump administration.
President Trump, who sees a kindred spirit and a fellow culture warrior in Argentina’s chainsaw-wielding leader, shocked Argentines and Americans alike on Tuesday when he warned that $20 billion depends on Miley’s success. The parliamentary elections are shaping up to be extremely competitive.
Treasury Secretary Scott Bessent went further Wednesday, saying the United States could provide up to $40 billion to Argentina using investment funds.
“We’re just helping a great philosophy take over a great country,” Trump explained after meeting with Miley at the White House.
Thousands of miles away, many Argentines are losing patience with that philosophy.
People interviewed on the streets of Buenos Aires on Wednesday had no illusions that President Trump’s lifeline would solve their problems.
“Suppose you get this money from a foreign country, what are you going to do with it?” asked Walter Willat, 56, a newsstand owner whose son had just been fired from his local Toyota dealership. “If the economy is to recover, it must come from domestic consumption.”
Miley’s sudden reversal of fortune
More than a year ago, markets cheered when Mr. Millais delivered on a banner promise inherited from his populist predecessor to rein in runway inflation. Many Argentines, accustomed to supermarkets adjusting prices upwards daily, hailed Millay’s program as a miracle that would bring normalcy to a notoriously chaotic economy.
But today, price stability is old news as Argentines grapple with a growing list of concerns.
The unemployment rate in Buenos Aires province rose to 9.8% in the second quarter of this year, compared to 7.3% in the same period in 2023, before Milay took office. Nationwide, salaries are not keeping up with inflation. Millei’s steep cuts in subsidies mean that even if prices stabilize, Argentines will pay more for things like bus fares, utilities and health care.
“Miley’s problem is that people take it for granted that inflation has gone down,” said Marcelo J. Garcia, Americas director at political risk consulting firm Horizon Engage. “There is a new generation of demands. The economy needs to grow, jobs need to be created. I don’t know if the government is ready to meet those demands.”
Rodolfo Nuñez, 43, a former factory worker from the Buenos Aires suburb of Pilar, said he voted for Millay in 2023 because he wanted change. Then the blows began to fall. His daughter’s. My parents, who are retired, were struggling to buy groceries with their $300 a month pension.
On August 29, the ceramics factory where he had worked for 18 years closed. ILVA fired all 300 workers at the factory in a WhatsApp message, citing the economic crisis, leaving Nuñez and his colleagues without severance pay or health insurance.
ILVA did not respond to requests for comment.
“What Millais promised he didn’t deliver. He messed up the retirees, he messed up my daughter, he messed up the workers,” he said outside the padlocked ILVA factory. Dozens of laid-off workers at the factory are currently camping out in protest, and the air is filled with smoke from burning tires and roasted chicken.
“What should I tell my landlord? You can’t pay next month? Where are you going?”
Nunez said he voted for the opposition party in last month’s local elections.
Argentina’s consumer confidence is in shreds
Government statistics show that poor and middle-class households have cut spending on all but essential spending. For example, clothing sales in September were down 10.9% year-on-year. The collapse in consumption will ripple through the supply chain.
“We are trying to cut costs as much as possible and survive without making a profit with very low production volumes,” said Alejandro Schwarz, owner of consumer electronics vendor and manufacturer Visuar, whose sales have fallen by about 25% in the first half of this year.
Other policies Mr. Millay relies on to fight inflation, such as high interest rates and central bank intervention to protect the peso, are further eroding the competitiveness of Argentine industry.
The peso has become so strong that shoppers can now make more money by splurging outside Argentina, from shopping malls in Chile to the beaches of Brazil.
Flood of fierce competition
After taking office, Millay removed trade barriers and eased import restrictions, exposing Argentina to an avalanche of cheap industrial and textile goods. Chinese e-commerce companies such as Temu and Shein don’t pay import duties on items worth less than $400.
But Mr. Millay maintained exorbitant taxes on Argentine manufacturers, leaving local companies with no choice but to pass costs on to consumers.
“This is not a level playing field,” said Pablo Yeramian, director of Argentine textile company Norfavril, which has already cut 20% of its workforce.
When footage of Ms. Milay smiling next to President Trump in Washington appeared on Argentine television on Tuesday, some manufacturers couldn’t help but hope that, in at least some sense, the similarities between the two presidents were more than mere rhetoric.
“No developed country in the world has given up its industrial sovereignty,” Galfione said, pointing to President Trump’s “Made in America” ambitions for the United States. “I think we should do what the United States says instead of doing what the United States says.”
Debre is writing for The Associated Press. Associated Press writer Andrea Vulcano in Buenos Aires, Argentina, contributed to this report.
