World markets are reeling from last week’s ‘Liberation Day’ announcements, on 2 April, of proposed tariffs inflicted upon more than 180 countries by President Trump. While it is too early to safely predict their likely effect upon the rug industry—the word ‘scramble’ crops up often in reference to business owners’ attempts to grapple with their implications—we spoke with several leading US based rug companies to gauge their initial reactions to the tariff’s unpredictable potential results.
The wider picture
Of the major rug weaving nations, after Thailand (36%) and China (initially 34%, then 104%, now 125%), Pakistan (29%) and India (26%) were the most threatened percentage wise. 10% tariffs are due to be inflicted for Afghanistan, Armenia, Azerbaijan, Morocco, Nepal, Turkey and Iran. However, Iran is currently under a comprehensive US embargo and sanctions therefore direct or indirect imports of Iranian goods, including rugs, into the United States are prohibited. The BBC reports that ‘India exports some $91bn (£69bn) in goods to the US, which account for 18% of its overall exports.’ On 10 April, the proposed tariffs announced for all countries except China were put on a ’90-day pause’.
A report by an Omnisend retail analyst cites 40% of US consumers as saying they’re willing to pay higher prices for products sourced from the US. But David French from the National Retail Federation said, ‘More tariffs equal more anxiety and uncertainty for American businesses and consumers. While leaders in Washington may not care about higher prices, hardworking American families do.’
RH, a luxury home furnishings company, saw its daily share price drop by 40%, taking it to its lowest rate since before the pandemic. Warren Shoulberg, Retail Watch columnist at Business of Home wrote: ‘In trading on Thursday afternoon, RH’s share price was around $150—a far cry from in August 2021, when it topped out at just over $700 a share. According to CNBC, it was RH’s worst-ever day on Wall Street.’ On the day of the announcements, RH CEO Gary Friedman said: ‘This move is quite stunning… It’s going to force everyone to just play a different game. It’s a new world when inventory is your friend.’ Last month, Shoulberg reported from The Inspired Home Show in Chicago, 2–4 March, writing: ‘Vendors there said they found it impossible to quote prices or give their retail customers any guarantees on what to expect with the situation changing daily, and sometimes by the hour.’
With some furniture industry reports speculating about more furniture being manufactured in the US, rather than in Asia, Furniture Today quotes ‘someone who has been in the industry since 1978’ as saying ‘U.S. manufacturing [has been] gone over a generation, starting in the late 1990s, so it’s not likely to return.’ While Shannon Williams, CEO of the Home Furnishings Association said ‘the U.S. unemployment rate is 4%. If 30% of those unemployed could work in manufacturing, we are talking about 2 million jobs across the whole US… for every industry. Asia has hundreds of millions of manufacturing jobs.’
In The Guardian, Alex Bronzini-Vender writes: ‘Our moment… is the apogee of a long-brewing structural crisis of American liberalism, where even the mechanisms that once aligned state policy with corporate interests have fundamentally broken down.’
The rug industry
There has never been a major rug weaving industry in the US, so without many US produced rugs available as an option to rug buyers, how could the situation affect this sector?
- US brands with inventory already in-country could find themselves in a beneficial position
- An increase in retail prices for new rugs, resulting in changes in buyer behaviour such as a potential increased market for antique and vintage pieces
- More limited choice of new rugs for US customers
- Manufacturers based in countries with less serious tariffs could see a boom in custom orders
- The rug industry might need to come together to lobby the US government
- Although there is not a big hand knotted rug industry in the US, could more rugs be finished, or even woven, in the US?
- There might be a reduction in the number of skilled weavers working globally as the important US market for handmade rugs decreases due to price hikes, further endangering this vital heritage craft. But it’s possible that luxury markets will be less brutally affected than others
It is only safe to say that nobody can yet be certain of the outcome of the impending tariffs, but some companies have shared their tentative views as follows:
Zollanvari
‘The situation is evolving rapidly, and we are closely monitoring developments to fully understand the potential implications for our business and the industry as a whole. To gain a more comprehensive understanding of the situation, we are actively engaging with our major clients in the United States to assess their initial reactions to the tariffs and their on-the-ground perspectives. This direct feedback will be crucial in informing our strategic response. We are currently assessing the impact on our existing inventory, pricing strategies, and supply chain. However, we remain confident that there will always be a market for unique, artisanal products of the highest quality. Our commitment to craftsmanship and enduring design ensures that our rugs will continue to hold their value, even in the face of market fluctuations.’
Tamarian
Current production: Nepal 95%; India / Afghanistan 5%
‘The tariffs mark a major historical moment, for better or worse. They have the power to shift the entire global economy in ways most of us have not begun to even imagine, as the effects will be more amplified than just the percentage of a tariff on a specific country… The macro-outcome is beyond our control. That leaves us with the task of embodying our core values: Beauty, and Integrity. We will continue to develop beautiful products that represent an appreciation for aesthetics and craftsmanship, transcending global economics. And we will do it in a manner where all our partners, whether clients or weavers, can see we are operating transparently, taking into account the wellbeing of the entire ecosystem.’
Samad Rugs
Current production: India 90%; Afghanistan / Nepal 10%
‘Price increases are never welcome and 26% on Indian carpets is severe, the short-term effects are going to be negative.
We will absorb some of the increases in the short term until we see if the tariff rates are negotiated and reduced. If you look for a silver lining, we have healthy inventory levels which will help sustain us in the short term. Customers might want to stock up prior to permanent price increases.
While our industry can withstand some short-term pain, ultimately it will affect everyone along the supply chain. Some of our suppliers are getting requests to pause orders and shipments pending more clarity, which will put a strain on manufacturers and artisans alike.
It is unfortunate that the tariffs have been imposed with broad brushstrokes, there is no handmade carpet industry in USA. The innovation and the style in our industry have never been better, people are not going to forget all of that overnight.’
