Trump's 50% tariff pushes India’s 'carpet city' to the brink, exporters seek bailout

The United States buys the lion’s share of India’s handmade carpets-Representative photo

In the twisting lanes of Bhadohi, known across the world as India’s “Carpet City,” silence has replaced the steady clatter of looms. Half-woven rugs lie abandoned, piled up in corners of workshops. The air is heavy with uncertainty. For generations, this region has thrived on its reputation for exquisite handmade carpets, but today it stands at a crossroads as new US tariffs threaten to unravel its economy.

The United States, which buys the lion’s share of India’s handmade carpets, has suddenly raised import duties to 50 percent. The hike has thrown the industry into turmoil, with nearly 85 percent of orders either cancelled or put on hold. Exporters calculate that shipments worth ₹9,600 crore are at immediate risk. Out of the Rs 16,000 crore annual turnover of the industry, this represents its very heart.

“All handmade carpet manufacturers are tense,” says Mehtab Alam, an exporter who runs Finest Rugs in Bhadohi. His workshop once echoed with the chatter of 30 artisans, but now only 10 remain. “Production has already fallen by 30 percent,” he says, pointing to a stack of carpets waiting for buyers who may never come. “The tariff war has left us sleepless.”

The problem stretches beyond his workshop. The Bhadohi–Mirzapur belt alone sustains around eight lakh workers directly, with another 12 lakh engaged indirectly in allied activities such as dyeing, spinning, washing, and transport. These are not corporate jobs but fragile livelihoods woven together in rural households, often supplementing meagre farm incomes. When shipments stall, entire villages feel the strain.

Sanjay Gupta, director of the Carpet Export Promotion Council (CEPC), has been fielding frantic calls from exporters since the tariff was announced. “In the larger economic picture of India, ₹9,600 crore may not appear substantial, but its impact on the socio-economic fabric of rural India is immense,” he explains. “This industry is not just about exports. It directly supports more than 13 lakh people, most of them artisans and weavers in villages who have no alternative source of income.”

For many of these families, weaving is more than an occupation; it is an inheritance. Skills are passed down from parents to children, with looms occupying a corner of homes. Now, however, the rhythm of this tradition is faltering. “Labourers are paid according to the square foot of carpet they weave. With orders drying up, production has nearly stopped. At least half the workers have already gone back to their villages,” says Samshad Bhai, a social worker who runs an NGO in Bhadohi. In the courtyards of Bhadohi, young men who once spent hours knotting threads now sit idle, uncertain whether to wait or return to farming.

What makes the situation particularly dire is the reliance on the American market. Nearly 60 percent of India’s carpet exports are destined for the United States. Uttar Pradesh alone accounts for almost 21 percent of India’s total exports to America, valued at ₹33,000 crore, much of it carpets. Mukesh Singh, chairman of the UP Coordination Committee of the Indo-American Chamber of Commerce, believes the government must act quickly. “India should not compromise. We must look for other markets. The time is tough, and exporters need a way out,” he says.

Yet finding an alternative will not be easy. Carpets are not a fast-moving commodity that can be diverted to new buyers overnight. Unlike textiles or garments, which are consumed in India’s warm climate, carpets have little domestic market. The rise of vitrified floor tiles has further reduced their demand in Indian homes.

“For years, exporters have relied on the American appetite for luxury rugs. The new tariffs have tilted the field in favor of competitors,” Singh said.

While India’s exports face a 50 percent duty, carpets from Pakistan, Afghanistan, Turkey, and China attract lower tariffs, making them far cheaper in the U.S. market.

“Turkey and Pakistan are already grabbing orders that should have been ours.” Gupta agrees, noting that the crisis is not just economic but also social. “This is not a regular industry. It is tied to rural households. If the sector collapses, millions will be forced to migrate to cities under dire conditions.”

Inside warehouses across Bhadohi and Mirzapur, ready shipments are gathering dust. Exporters say buyers in the U.S. are either asking them to absorb the tariff costs or cancelling contracts altogether. For small-scale exporters, the burden is unbearable. “The industry is in a deep crisis,” says Mehboob. “Exports worth thousands of crores are stuck, and lakhs of artisans risk losing their jobs.”

Call for government bailout and incentives

With the future hanging in balance, industry representatives have turned to the government. The CEPC has submitted a set of proposals, urging the Centre to announce relief measures. Exporters want a bailout package that covers part of the tariff burden, revival of incentive schemes suspended in recent years, restoration of a five percent interest subvention on export credit, and special HS codes that distinguish handmade carpets from machine-made ones. They also demand reciprocal tariffs on Turkish machine-made carpets, which have been eating into India’s share.

The government, according to officials, is considering options. Similar to measures rolled out during the COVID-19 downturn, liquidity injections and export-promoting reforms are on the table. Diversifying into new markets is also being explored, though exporters privately admit that no single market can match the scale of demand in the United States.

For now, the looms of Bhadohi remain silent, their threads tangled in uncertainty. The stakes are high, not just for exporters but for the very identity of this region. India’s handmade carpet industry dates back more than 500 years, tracing its origins to the Mughal courts.

That legacy is now under threat. “Carpets are woven into the fabric of our rural economy,” says Gupta. “If this industry unravels, so will the livelihoods of millions.” In the villages of Bhadohi, where generations have tied knots into wool and silk, there is both pride and fear. Pride in a craft that has dazzled the world, and fear that without immediate intervention, the silence in their looms may become permanent.