I just came across some noteworthy news: FATE, a tire factory with nearly a century of history, is about to close, resulting in nearly a thousand people losing their jobs. This is not an isolated incident; it reflects a structural crisis in the entire Argentine tire industry.

Data clearly illustrates the issue. Last year, the value of imported tires skyrocketed from $475 million in 2024 to $688 million in 2025, a 45% increase. Currently, imported products account for 75% of the market. And looking at the sources of imports, Brazil remains the main supplier, but China's growth is the fastest—jumping from less than $150 million in 2024 to $300 million in 2025. Behind this is a key change: the government cut tire import tariffs from 35% directly down to 16% in less than a year.

Why are imported tires selling so well? The cost difference is too significant. Chinese brands are 40% cheaper. Although truck drivers know the quality isn't as good as Michelin or FATE, they still choose imports because of the big price gap. The question is, what is this price advantage based on? Global overcapacity combined with dumping-style pricing strategies.

Even more severe is the impact on the entire industry. The tire sector is just a microcosm. Last year, car imports increased by 55.9%, while domestic car manufacturing actually declined by 3%. The Argentine Industrial Union (UIA) warns that this model is pushing local manufacturers to become importers rather than producers. Unemployment is also rising rapidly—over the past two years, the industrial sector has lost 65k jobs.

Interestingly, policymakers' logic is to use imports to lower prices and combat inflation. This tactic has indeed been effective for tires—prices dropped by 38.3%. But at what cost? Unemployment, industrial hollowing-out, and the destruction of decades of accumulated production capacity. Once these factories close and technical talent disperses, it will be difficult to rebuild competitiveness.

Industry insiders point out that not all problems can be blamed on imports. The tire industry itself has structural issues that have accumulated over many years. But this doesn't mean imports aren't a problem—they are, but the issue is more complex. If the government wants to open the market, it must also implement supporting measures: reduce tax burdens, provide financing support, reform labor laws, and give local companies a chance to compete. The current approach is simply market liberalization without any protections.

What does FATE's closure mean for Argentina? It's not just about a thousand jobs lost. Behind it is the collapse of the entire supply chain—suppliers, small and medium-sized enterprises, skilled workers. This is a typical case of deflation accompanied by deindustrialization. If this continues, Argentina's economy will become increasingly dependent on imported goods, and the competitiveness of local manufacturing will be completely destroyed.