BUENOS AIRES (CNS) - Unease looms over Argentina's main toy manufacturers even with the approach of Christmas, traditionally the sector's most important sales period when a surge in orders keeps many factories viable through the rest of the year.
Across factories nationwide, six of every 10 machines are out of service, according to industry figures, a stark indicator of shrinking local production and idle capacity that has become increasingly common on factory floors.
Demand for toys has already been weakening for years. Manufacturers point to several trends: children spending more time on screens, the steady erosion of purchasing power amid high inflation, and a decline in birth rates. But in recent months, a new source of anxiety has taken shape - a sharp surge in imported toys, particularly from China.
Only a year ago, around 200 businesses were registered as importers in the toy sector. By the end of 2025, that number had climbed to nearly 550, reflecting a rapid expansion in purchases from abroad. What was once a robust domestic industry, employing roughly 8,000 workers and supported by some 3,500 toy shops across the country, is now seeing local production drop off.
The shift accelerated after President Javier Milei's libertarian government dismantled long-standing import barriers. The administration cut tariffs on toys from 35% to 20%, simplified customs procedures, and aligned trade rules with Mercosur standards. The government argues the measures are designed to lower prices for consumers. Domestic manufacturers, however, say they have been left unable to compete with cheaper foreign products.
Despite Milei's political alignment with tariff-wielding U.S. President Donald Trump, imports from China surged by nearly 80% in the first half of 2025. Chinese-made toys now account for 94% of all toy imports to Argentina, according to industry data.
Although several industry leaders have called on Milei to regulate trade to protect existing local jobs and businesses, his government is standing by deregulation, policies embodied in a Deregulation Ministry that inspired Elon Musk's former Department of Government Efficiency in the U.S. government.
"No country went broke for opening international trade," Milei said a year into his presidency.
For decades, Argentina's restrictive import regime had shielded local producers from foreign competition, creating a protected market. That market is now confronting global manufacturing giants capable of selling at far lower costs - though not necessarily, industry representatives argue, at higher quality.
"The market is expanding, but it's also distorting," said Julian Benitez, a representative of the Argentine Toy Chamber. "A lot of what shops are offering doesn't comply with safety regulations - and these are kids we're talking about."
Concerns over safety have become a central issue for both manufacturers and retailers. Industry representatives say many imported toys, particularly those sold online, bypass the controls required for locally produced goods.
According to the chamber's research, toys and goods that don't comply with basic international standards are being sold in the local market. In fact, products recalled by the U.S. Consumer Product Safety Commission because they contained chemicals dangerous for children were found online being sold to Argentine families.
A father himself, Benitez said he sees the purchasing power of families has sharply eroded in the past two years, after an inflation shock cut deeply into real wages and left many households struggling to afford even basic goods, pushing parents to seek out ever-cheaper options.
"It affects producers more than us," said Silvia Chocran, the owner of a toy shop that has been in her family for more than 40 years. "What really hurts commerce is illegal sales. If you buy abroad without controls, you'll obviously find it cheaper."
Chocran points to the rapid growth of e-commerce platforms as a major factor reshaping consumer behavior. "People see something nice, attractive and cheap online, they bring it in, and then pay the consequences," she said. "There's no control."
Still, she describes the shift as part of a broader cultural change rather than a death knell for brick-and-mortar stores. "People are getting used to buying through platforms. These are new modalities," Chocran said. "But there are still many people who like to look, touch and feel what they're buying - especially older customers who don't understand the platforms and want to see what they're getting. A lot of young people, too."
For now, Chocran says her store is selling roughly the same volume as last year, but under far tighter conditions. Prices are frozen, while costs - from rent to utilities - have continued to rise. "Everything has increased," she said.
Despite the bleak outlook for the sector, Chocran remains cautiously hopeful. "This is a global change," she said. "At first there's always a boom, and then it fades. People eventually come back to the neighborhood shop."
Lucia Cholakian Herrera is a Courthouse News correspondent based in Buenos Aires, Argentina.
Source: Courthouse News Service
