On U.S. Liberation Day, President Donald Trump announced a 26% reciprocal tariff on Indian imports, dealing a severe blow to India’s diamond and jewellery industry. While India remains one of Asia’s most resilient economies, this move threatens a sector heavily reliant on U.S. trade.

With total U.S. exports at $77.5 billion in FY24, diamonds accounted for 7% of this trade. The U.S. imports approximately $10 billion worth of Indian diamonds annually—30.4% of India’s $32 billion gems and jewellery exports. As the world’s leading diamond cutting and polishing hub, handling 90% of processed diamonds, India now faces a sharp downturn due to the newly imposed tariffs.

Sudipto Haldar, CTO of DiaTrac Solutions, voiced strong concerns over the impact of the tariff on India’s diamond industry, emphasizing the dire consequences it could have on global competitiveness and trade dynamics.

“This tariff could cripple India’s diamond sector, eroding competitiveness and shifting buyers elsewhere. The U.S. has been one of the biggest markets for India’s cut and polished diamonds, and this sudden increase in duties could push importers to explore alternative sourcing hubs such as Belgium and China. If this trend continues, we could see significant disruptions in supply chains and a reduction in India's market share in the global diamond industry. The only hope is a long-term trade deal with the U.S. to protect this vital industry. Without intervention, we may see job losses on a massive scale and a long-term decline in India's dominance in the sector.”

While gold jewellery may remain unaffected, the diamond trade is at serious risk. The broader gems and jewellery sector, which has already been grappling with multiple challenges, now faces an even tougher road ahead.

"Indian Gems and Jewellery sector has been already struggling since last few years due to changing customer preferences, lab-grown diamond technology, demonetization, soaring gold prices, and competition for polishing from other countries! The US Tariff developments now create additional adverse impact on Gems and Jewellery Sector, with real risk of job losses and margin erosions. The exposure to USA for this sector is huge - almost USD 11.5+ billion exports are to US, i.e., almost 13% of the sector’s total exports, which is around 30% plus of its total exports. Till now, India’s tariffs on gold jewellery imports are around 20%, which is higher than the US import tariff (5% plus). The US levied earlier NIL tariff on cut and polished diamonds while India levies 5%. The sector hopes Government of India covers this sector in its negotiations for a trade deal with USA."

As global trade tensions rise, urgent diplomatic intervention is needed to sustain India’s stronghold in the industry. Indian exporters now face mounting pressure to engage proactively with U.S. authorities to negotiate a more favourable tariff regime while simultaneously seeking alternative global markets to mitigate risks. The coming months will be crucial in determining the future trajectory of India’s diamond and jewellery exports amidst these evolving trade dynamics.