Meet&CoAs the rug sector moves toward 2026, uncertainty around U.S.–India trade policy has become a central concern for manufacturers and distributors. Few product categories have been hit as hard as rugs following the implementation of steep tariffs on Indian imports.
India has long served as a cornerstone supplier for handwoven rugs sold in the United States. With tariffs on Indian goods now set at 50%, companies across the industry are being forced to reconsider pricing strategies, profit margins, and long-standing sourcing models.
Recent trade data highlights the scale of the disruption. Figures from the Global Trade Research Initiative show that India’s exports to the U.S. dropped sharply between May and September, declining by more than one-third in value during that period. The downturn followed an executive order issued on Aug. 27, when the U.S. government raised tariffs on Indian products in response to India’s continued purchases of Russian oil.
Rethinking the future of sourcing
Industry leaders agree that easing or removing tariffs on handmade rugs from India would bring greater stability to the supply chain. Predictable costs would allow brands to invest more confidently in product development and support retail and wholesale partners more effectively.
According to Diana Samuels, director of operations at Harounian Rugs International (HRI), the tariffs are already triggering long-term changes. Rising import costs and heightened consumer price sensitivity are accelerating a shift toward machine-made and synthetic rugs, putting pressure on demand for premium handcrafted products.
Samuels notes that a more balanced trade environment would strengthen competitiveness for U.S. importers and retailers while preserving access to a wide range of designs and constructions. She believes such conditions would also help sustain employment across logistics, distribution, and retail channels.
Despite the challenges, some executives see opportunity. Chad Stark, CEO of Stark Carpet, believes companies that adapt quickly and protect value through creative strategies will be best positioned to emerge stronger once the market stabilizes.
Source: https://www.furnituretoday.com/
Pricing pressure and margin strain
Manufacturers have responded to higher costs in different ways. Some have absorbed much of the impact, at least temporarily, while others have introduced price increases or added surcharges.
Capel Rugs has limited price adjustments so far, raising prices by an average of 8% in early October after absorbing tariff costs for months. The company hopes that further increases can be avoided if trade conditions improve.
Jaunty Rugs has taken a different approach, implementing a temporary tariff surcharge rather than permanently raising prices. While this strategy helps offset costs, it has also reduced profit margins.
Stark points out that at a 50% tariff rate, significant price increases are difficult to avoid. Custom and boutique-focused businesses are particularly vulnerable, as they often absorb higher costs directly. For certain categories, such as hand-loomed rugs produced exclusively in India, alternative sourcing options simply do not exist.
At HRI, the tariffs have driven a reassessment of pricing structures and product mix. Higher material, labor, and logistics expenses have prompted the company to explore new sourcing options while working to minimize the impact on customers.
Oriental Weavers, by contrast, has been less exposed due to most of its assortment falling under lower tariff brackets. Even so, the company acknowledges that some additional costs must be passed along to maintain financial stability.
Impact on demand and buying behavior
Rising prices are also influencing purchasing decisions as the new year approaches. Some retailers are scaling back inventory commitments, buying primarily for specific projects rather than stocking showrooms.
HRI reports that increased price sensitivity across the market has led to noticeable shifts in demand, requiring ongoing adjustments to sourcing and assortment strategies. Capel observes that while the high-end segment remains relatively resilient, mid-range and value-oriented categories are under greater pressure.
Although India remains a critical partner for the U.S. rug industry, current trade policies may permanently alter that relationship. As companies adapt to higher costs and changing consumer behavior, the effects of today’s tariff decisions are likely to shape the market well beyond 2026.
