Argentina reels from Milei’s free-market revolution

By the Editorial Team · Monday, September 21, 2026

Argentina’s manufacturing sector has sharply declined following President Javier Milei’s removal of trade protections, resulting in extensive job losses and factory closures. This downturn has led to nearly 40 percent idle industrial capacity and heightened unemployment, raising concerns about the social impact before any potential economic benefits from the reforms materialize.

In Argentina, the manufacturing sector is facing significant challenges following the economic reforms implemented by President Javier Milei since his election in 2024. His administration’s move to eliminate protectionist trade policies—such as import quotas and tariffs—has precipitated a marked decline in domestic industrial activity, leading to widespread job losses and factory closures.

Kioshi, a footwear manufacturer near Buenos Aires, exemplifies this downturn. Once employing nearly 120 workers and producing 40,000 pairs of shoes monthly, the company now operates with just 14 employees and has cut output to about one-quarter of its previous volume. Kioshi’s director, Emmanuel Fernandez, attributes the decline to the influx of imported goods flooding the market after the lifting of trade restrictions, which has undercut local producers struggling to compete on price.

Recent data highlight the broader industrial downturn in Argentina. By June 2026, around 40 percent of the country’s industrial capacity remained idle, and manufacturing output experienced a 5 percent decline between June and July—its sharpest contraction in 16 months. Over the past three years, approximately 90,000 industrial jobs have been lost, and nearly 30,000 companies have shut down, according to the Argentine Industrial Union, which has called on the government to intervene.

The economic landscape in Argentina has shifted since Milei took office. While inflation was the dominant issue at the start of his tenure, recent polling indicates that unemployment has overtaken it as the primary concern among Argentines. Milei's administration credits the initial increase in joblessness and industrial setbacks to transitional challenges associated with market liberalization. The president has described the closures and layoffs as part of a “creative destruction” process, referencing economist Joseph Schumpeter’s theory that economic innovation requires the displacement of outdated industries.

However, local business leaders express concern that the promised emergence of new industries has yet to materialize. Fernandez noted that many displaced workers have been forced to seek employment in informal sectors such as delivery app services, underscoring the immediate social toll of the reforms.

Despite government assurances of a more competitive and prosperous economy in the longer term, the manufacturing sector’s decline and rising unemployment remain pressing issues as Argentina continues its shift toward a freer market.

This article was reported by synthesizing coverage from multiple independent news outlets to present a balanced, unbiased account. Read about our editorial standards. Spotted an error? Let us know.