Trump's 26% Tariff Hike Threatens India's Diamond & Jewellery Exports

Surat: At a time when the Indian diamond industry is struggling with a severe recession, the Trump administration’s decision to impose a 26% reciprocal tariff on gems and jewellery exports from India to the US has sent shockwaves through the industry. With over $10 billion worth of polished diamonds and jewellery exported annually to the US, this tariff threatens to cripple the sector, leaving both Indian exporters and American buyers facing severe repercussions.

The Gems and Jewellery Export Promotion Council (GJEPC), India’s apex body for the sector, has expressed deep concerns over the impact of the tariff. The council warns that the new tariff will significantly burden Indian exporters, increase costs for American consumers, and disrupt the supply chain of high-value jewellery products.

“This tariff hike will severely affect India’s jewellery exports, creating uncertainty for thousands of businesses and millions of workers who depend on this sector,” said Kirit Bhansali, Chairman of GJEPC. He further urged the Indian government to accelerate negotiations for a Bilateral Trade Agreement with the US to mitigate the impact of this tariff.

Already reeling under the weight of a global economic downturn, declining consumer demand, and reduced liquidity, the Indian diamond industry is now staring at another major crisis. The US has long been India’s largest market for polished diamonds and jewellery, accounting for over 30% of total exports. The tariff hike could lead to: increased costs for American retailers, potentially making Indian diamonds less competitive in the global market.

Loss of market share to competitors such as China and Thailand, which may negotiate better trade terms with the US.

Job losses in India’s Surat and Mumbai diamond hubs, where millions of artisans and traders rely on exports to sustain their livelihoods.

“The reciprocal tariff will not only impact Indian exporters but will also lead to higher prices for American buyers. The US jewellery industry depends heavily on high-quality Indian diamonds, and this tariff could disrupt longstanding trade relations,” said a leading diamond exporter from Surat.

As the industry braces for a challenging period ahead, GJEPC is actively engaging with the Indian government and global trade stakeholders to address risks and explore alternative strategies. While the council acknowledges that the US administration’s intent is to address trade imbalances, it urges the Biden administration to uphold the spirit of the longstanding Indo-US trade partnership.

“We hope that diplomatic negotiations can lead to a resolution that supports free trade while ensuring fair economic policies for both nations,” Bhansali added.

With the global supply chain for diamonds and jewellery undergoing a significant shift, industry experts predict that the coming months will be crucial for India’s trade strategy. If a favorable trade agreement is not secured, exporters may need to diversify into alternative markets like the UAE, Hong Kong, and Europe to counter the impact of the tariff.