After winning Trump's $20 billion, President Milei must win votes as Argentine industry reels
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1:20 AM on Friday, October 17
By ISABEL DEBRE
BUENOS AIRES, Argentina (AP) — The factory floor used to roar.
Walking around his textile mill in southern Buenos Aires, Luciano Galfione pointed out the up-to-the-minute machines that once whirred and clattered as 200 employees churned out fabric to be transformed into athleisure and other apparel for Argentina’s vast middle class.
But on Monday afternoon, the factory was so quiet that Galfione's footsteps rang clear through the compound. A handful of workers at the Galfione Group factory in Argentina’s capital spooled yarn and dyed cloth.
Almost two years after libertarian President Javier Milei stormed to power on a promise to rescue Argentina’s crisis-stricken economy through harsh austerity and free-market reforms, falling orders and surging competition have forced Galfione to cut operations by 80%, lay off or suspend half his staff and use his own savings to keep his family's 78-year-old firm afloat.
Other companies have simply closed their doors. Over 17,600 businesses — among them 1,800 manufacturers and 380 textile companies — have folded in the last year and a half, according to Fundación Pro Tejer, a nonprofit representing textile manufacturers.
“We’re seeing an industry in crisis, and it’s about to go bankrupt,” said Galfione, who also runs Fundación Pro Tejer. “Not only textiles. Textiles are just the first and fastest to fall."
As Argentina heads to Oct. 26 midterm elections widely seen as a referendum on Milei’s policies, Galfione’s troubles reflect bigger shocks jolting the country. The economy has sputtered. Cheap imports have gutted manufacturing. Spending has stumbled, squeezed by higher unemployment and lower wages.
The turmoil engulfing Argentine financial markets began when voters in the manufacturing belt of suburban Buenos Aires — a region that for decades represented the dream of national industry nurtured by tariff protection — punished Milei in a provincial election last month.
The scale of Milei's humiliation triggered a sharp peso sell-off and sent officials scrambling to secure $20 billion in financing from a friendly Trump administration.
President Donald Trump, who sees a kindred spirit and fellow culture warrior in Argentina's chain saw wielding leader, shocked Argentines and Americans alike Tuesday by warning that the $20 billion was contingent on Milei's success in what is shaping up to be a hotly contested legislative election.
Treasury Secretary Scott Bessent went further on Wednesday, saying that the U.S. could tap investment funds to provide Argentina with up to $40 billion.
“Just helping a great philosophy take over a great country,” Trump explained after meeting Milei at the White House.
Thousands of miles away, many Argentines are losing patience with that philosophy.
Those interviewed on the streets of Buenos Aires Wednesday had no illusions about Trump's lifeline fixing their problems.
“Let's say they give us this money from abroad. What am I going to do with it?” asked Walter Willatt, a 56-year-old newsstand owner whose son was just laid off from a local Toyota dealership. “If the economy revives it will have to be through domestic consumption.”
Over a year ago, markets cheered as Milei fulfilled his flagship promise to reduce the runway inflation that he inherited from his populist predecessors. Many Argentines — who had grown accustomed to supermarkets revising prices upward everyday — hailed Milei's program as a miraculous outbreak of normalcy in a notoriously topsy-turvy economy.
But today, price stability is old news as Argentines contend with a lengthening list of worries.
Unemployment in Buenos Aires Province climbed to 9.8% in the second quarter of this year, compared to 7.3% during the same period in 2023, before Milei entered office. Salaries nationwide haven't kept up with inflation. Milei's major subsidy cuts mean that even if prices have stabilized, Argentines are paying more for bus fares, utility bills and healthcare.
“Milei's challenge is that the public now assumes inflation has gone down, that’s a given,” said Marcelo J. García, Director for the Americas for the Horizon Engage political risk consultancy firm. “There's a new generation of demands. The economy needs to grow, there needs to be job creation. I’m not sure that government is prepared to meet those demands."
Rodolfo Núñez, a 43-year-old former factory worker in Pilar, outside Buenos Aires, said he voted for Milei in 2023 because he wanted change. Then the blows began to fall. His daughter's epilepsy medication shot up in price. His retired parents struggled to afford groceries on their $300-a-month pension.
On Aug. 29, the ceramic factory where he worked for the last 18 years shut down. The company, ILVA, fired all the plant's 300 workers in a WhatsApp message that cited the economic crisis, leaving Núñez and his colleagues in limbo, without severance pay or health insurance.
ILVA did not respond to a request for comment.
“What Milei promised, he didn’t do. He messed with retirees, he messed with my daughter and he messed with the workers,” he said from outside the padlocked ILVA factory where dozens of dismissed employees now camp out in protest, the air filled with smoke from burning tires and roasting chicken.
“What do I tell my landlord? That I can't pay her next month? Where am I going to go?”
Núñez said he voted for the opposition in last month's regional elections.
Government statistics show poor and middle-class households cutting back on all but essential spending. Clothing sales, for instance, fell 10.9% in September compared to the year before. The collapsed consumption reverberates down the supply chain.
“We’re reducing costs as much as we can, trying to survive with very low production and without making money,” said Alejandro Schvartz, owner of Visuar, a household appliance vendor and producer whose sales dropped roughly 25% in the first half of this year.
Other policies that Milei depends on to fight inflation — such as high interest rates and central bank interventions to defend the peso — further erode the competitiveness of Argentine industry.
The peso has become so strong that shoppers now get more bang for their buck by splurging anywhere but Argentina — from Chile’s malls to Brazil’s beaches.
Upon taking office, Milei tore down trade barriers and relaxed import restrictions, opening Argentina to an avalanche of cheaper industrial and textile products. Chinese e-commerce companies like Temu and Shein pay no import duties for products valued below $400.
But Milei maintained sky-high taxes for Argentine manufacturers, giving local companies no choice but to pass on the cost to consumers.
“This is not a fair playing field,” said Pablo Yeramian, director of the Argentine textile company Norfabril, who has already cut 20% of his staff.
As scenes of Milei beaming beside Trump in Washington flashed across Argentine televisions on Tuesday, some manufacturers couldn't help wishing that the similarity between the two presidents was, in at least one way, more than just rhetorical.
“No developed country in the world surrenders its industrial sovereignty,” said Galfione, pointing to Trump's “Made in America” ambitions for the U.S. “I think instead of doing what the U.S. tells us, we should do what they do.”
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Associated Press writer Andrea Vulcano in Buenos Aires, Argentina, contributed to this report.
