So let's assume that there is one pair of jeans in China and one pair in Flores. La Chiqui decides to buy the jeans in China. The pesos get converted to USD ,then to Yuan and the Chinese maker of the jeans can now take the money to buy his wife a spa day. He has not heard of Argentina except about Messi and would not know what to order from here with his money.
In the meantime there is a money investment in the Argentine jeans that is not being converted in anything in the Argentine economy and a second pair cannot be made as the money for the materials has not been earned. There is no other buyer as pesos are not circulating in the economy anyway. If La Chiqui had invested in the Argentine jeans it would have liberated pesos to buy a hair appointment for someone. But instead we now have uncut hair and a hairdresser sitting on dead time which he would have liked to use to take his talented son to football. But as that time was unpaid he cannot pay for that football practice. So you see what La Chiqui's preference for the Chinese jeans can do?
It could make Argentina's chances for the Worldcup in 2038 look shakey indeed..
This assumes both jeans are equal. In reality they are not of equal quality or price. So if one can buy $10(15,000 pesos) jeans from China, instead of $100 (150,000 pesos) jeans from Argentina, the buyer, La Chiqui, now has the remaining $90 ($140,000 pesos) of disposable income that can now be spent on something else, hair cuts, restaurants, electronics, more clothes, investments, etc. There will be various different indirect jobs, the cotton supplier etc, vs the individuals that work at the ports,logistic companies, customs brokers, importers, etc.
It is not as straight forward a simple calculation as one might think.
But the larger impact is that $140,000 pesos of additional savings that can be spent on other things. The expectation is that will help spur the economy. When one considers that the entire textile industry and its supply chain is 500,000 people (per article this week quoted in one of these threads), it is not disappearing completely. In the last 2 years, about 3% of jobs were lost across the entire industry and a reduction of 3-3.5% production capacity. So while there were about 15-18,000 jobs lost, the rest of the country, ~47 million people now save significantly more on clothes and can spend on other things. It isn't a 1:1 because the ratio of population to textile industry related jobs is ~94:1. So instead of 1 employee within the textile value chain gonig for a haircut, much more of the general population can now go for hair cuts and more.
It is this logic that has supporting global trade over the last ~40 years, resulting in the global economy growing and maximizing consumption of goods and services.
To LuckyLuke's points/questions, they touch on the same logic etc.
The soybeans and soy related, corn, wheat, beef are the major exports.
The values in the table below are from 2023, and the amounts have increased since.
Overall there was about $12B trade surplus in 2025, driven by agriculture. These values increase not just because of quantity but because the global price has gone up.
Net surplus or deficit will support or put pressure on the peso. That is where you will see overall impact.
It was noted last year, that the agriculture industry has the fastest payback and most immediate impact per investment.
Their impact can be 1yr away, where as oil and gas, mining etc can take years for new projects or even expansions of existing to reach production.
The industries are not related to each other so there is no zero sum between them.
Individuals need to make a decision if they lose a job in their jurisdiction to move to another jurisdiction to get a job.
This does happen. I have seen people frequently live in one province nearby (Mendoza), or not, (Cordoba, Tucuman, another one in the south) where they transport on their time and expense (airplane flightS included) to get to their pick up location for their jobs.
I have been told that due to the previous protectionist policies, farms in Argentina are extremely resourceful and have incredible workshops apparently that North American farmers would be jealous of mainly because they needed to maintain and repair everything themselves since it was not easy for them to get parts imported. Now with importing much easier, they can upgrade equipment size and get newer equipment to improve productivity.
Also due to the protectionist policies, Argentina is quite capable in producing much within the borders not relying on imports. As this has been relaxed, they are becoming more reliant on imports, but that has also brought with it significant savings in the price of appliances etc, which again can now be spent on other things.
With regards to Argentinians increasing international market share, I think that would be industry specific.
As climate permits (I believe prior to 2024 they suffered from drought etc lowering yield), and increasing prices, and sound tax policy, the agriculture will typically reinvest what they can to increase next years crops. This is among the reasons why they give them the reduced/eliminated retentions on FX, among helping shore up reserves, it also provides them with increased profits (so instead of witholding/retentions off the top, they pay more income tax), but works out a bit better for them so they can now invest more in next years crops. Argentina's ability to increase market share can be a result of external trade policies (ie, US), but similar to OPEC cartel members not obeying quotas, if the market is oversupplied the volume may still get sold but the price may go down. I think the marketplace is large enough and individual participants are acting independently in their own self interest.
In regards to the other industrial industries in Argentina, I don't think Argentinian textile companies were trying to grow internationally, as their pricing was supported by protectionist policies. There was no way they could compete on price, and it doesn't look like on quality for mass produced goods. Specialty leather goods etc may be a separate or sub industry. The tire company that closed, I thought the family had mentioned, they had gone bankrupt in 2019, and had been losing money for 30 years. I don't really understand how a business can be losing money for 30 years and remain in business. I understand the different between PnL and cash flow, but 30 years is a long time. They may have had other companies and were able to shift profits around, ie, rent the property, building, equipment to themselves, so the tire manufacture may be operating at a loss, but the other companies are operating at a profit. I thought I heard they have had some labour dispute issues but I don't know the details.
Typically, people like to look at GDP growth as the indicator that overall policy is positive, but the issue is that inflation also makes the absolute number get bigger (Nominal GDP). So the question becomes is there real growth or not. and not just that, but how is it distributed. Is it concentrated to a small elite class, or distributed amongst the population. I think its important to 1) look at where on the spectrum is the news source one reads and be aware of biases, 2) remember the squeaky wheel gets the grease, just because they are the loudest voice doesn't necessarily mean they are representative of the general population, 3) CABA and BA Province, have populations of 3.1M (7%) and 17.5M (38%) respectively, and the population of Argentina is 46M. it is worth remembering that CABA, or the Province of BA, are not representative of the country as a whole. That is a reason why the politics are as fragmented with other regions being more conservative leaning and economies based on very different things.
www.batimes.com.ar
