Argentine companies and the chambers grouping them are in scramble mode ever since U.S President Donald Trump’s reciprocal tariff policy went into effect on Wednesday. 

Argentina is one of eleven countries to be slapped with a minimum 10% tariff for all products exported to the United States. In order to define the new tariffs for each country, the Trump administration simply divided the bilateral trade deficit by the imports it has with each nation and divided that by two.

It is still too early to know how industries will be impacted. Early returns, however, show that there are deep concerns over the hit country’s manufacturers could face in an already turbulent local scene.

A call for more reforms

“We are very worried,” said Daniel Funes de Rioja, head of the Argentine Industrial Union ( UIA, for its Spanish initials). He said that this could spark an import flow to Argentina as some countries could divert their products if they lose the U.S. market, and demanded reforms from the administration.

“Argentina took an important step over the past year regarding macroeconomic stabilization, but fiscal, logistics, infrastructure, and labor reforms are still needed,” he added.

Marco Meloni, a textile businessman and vice president of the Argentine Industrial SMEs association (IPA, by its Spanish acronym), pointed to the irony that Milei seems to do everything Trump does, “except increasing tariffs.” Last week, the Argentine administration reduced import tariffs on clothing and footwear from 35% to 20%, the latest in a series of import liberalization measures. 

He added that this harmful decision for local companies has been accompanied by utility bills increasing “between 250% and 300%.” Meloni called on the government to lower taxes in order to make Argentine industry competitive.

Aldo Lo Russo owns Baigorria, a 62-year old company with 50 employees that manufactures bolts and screws used as auto parts. The company sells its products to 14 countries, with 50% of its export volume heading to the United States. “I am waiting to see what is going to happen, my competitor is China, and they just got hit with a 34% tariff,” Lo Russo told the Herald.

However, like other analysts, he considered it “very likely” that Beijing would devalue its currency to compensate for the weight of the tariffs. Meanwhile, Argentina keeps a 1% monthly devaluation policy, which could change after the administration signs a new deal with the IMF. A recent report by the EPyCA consulting firm highlighted what happened when a similar situation took place during Trump’s first term. In 2018, he introduced additional tariffs on solar panels, appliances, steel, and aluminum, which started with China and then extended to the EU, Canada, and Mexico.

“The Chinese responded by devaluing the yuan, which effectively generated an outflow of capital from emerging markets and hit Argentina squarely,” the report said. It added that the move caused a crisis during then-President Macri’s administration, as it fueled capital flight, an international market financing cut-off, and devaluations.

Lo Russo added that the Argentine economy has not grown steadily since 2011, and that things have worsened since 2023. “Manufacturing has taken a toll,” he said, adding that the exchange rate has been “fictitiously” inflated, hindering the ability to compete with other countries.

“Salaries begin to have an outsized impact on the final product. Labor-intensive autopart manufacturers bear the worst of it,” Lo Russo said. “We are only doing well because we are absorbing sales from companies that are shutting down.”

José Luis Lopetegui, head of international trade at the Argentine Confederation of Medium-Sized Companies (CAME), said that these  “totally protectionist” measures enacted by Trump seek to put the U.S. “back in charge” of the global economy. 

“[Argentine companies] will not lose competitive advantage because other countries will also be affected,” he said. “But what does the United States achieve with this? It will raise costs in world trade. If the U.S. raises tariffs and  China, Europe, and Brazil retaliate with the same measure, it will spark global inflation.”

What Argentine companies stand to lose the most?

A report by the United States Chamber of Commerce in Argentina (AmCham Argentina) offered some hints as to which sectors of the Argentine economy could suffer. They pointed out that the trade balance between the two countries has historically been negative for Argentina. 

“The average annual deficit [for Argentina] between 2015 and 2023 was approximately US$2.7 billion,” the report added. Argentine exports to the U.S. in 2024 were made up of crude petroleum oils (31%), gold (13%), unalloyed aluminum (5%), and fuel and wine (3%), among others.

However, tariffs vary across different sectors. Until the new measures were announced, Argentine glass, electrical products, metals, chemicals, and wool were taxed by the U.S. at less than 1%. For these sectors, the 10% base tariff is a harsh upgrade.

Amcham added that, according to a Goldman Sachs International Bank report, tariffs in Argentina for U.S. products average approximately 6.4%, while the U.S. applies an average tariff of 1.2%. 

Stressing that it is his personal view and not CAME’s, Lopetegui said that the comparison is unfair.

“That’s crediting Trump’s argument that it’s ‘unfair that everyone lives off the backs of the United States.’ The U.S. has tremendous industrial and agricultural power, and takes the lion’s share out of the financial systems,” he said.