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Tariffs on diamonds: a changing landscape

The United States has recently implemented significant changes to its policy for tariffs on diamonds and jewelry imports, creating uncertainty and concern across the global industry. These changes involve a combination of baseline tariffs and country-specific reciprocal duties, impacting various stages of the diamond supply chain, from rough diamond producers to polished diamond cutting centers and ultimately, consumers.  

Here’s a breakdown of the current situation:

1. Baseline tariffs

  • A 10% baseline tariff has been imposed on diamonds imported from most countries, according to Rapaport.
  • This applies to both rough and polished diamonds, depending on their country of origin (where they were substantially transformed or cut and polished).  

2. Country-specific reciprocal tariffs

  • In addition to the baseline tariff, certain countries face higher “reciprocal” tariffs due to trade imbalances with the U.S..
  • India, the world’s largest cutting and polishing center, faces a 27% tariff on diamonds entering the U.S., says Rapaport.
  • Other key countries like Botswana, Angola, South Africa, China, and the EU are also impacted by these tariffs, with rates ranging from 20% to over 100% in some cases.  

3. Impact and industry concerns

  • These tariffs significantly increase the costof importing diamonds into the U.S., potentially impacting retailers and ultimately, consumers.
  • The diamond industry, particularly in India, is expressing alarm and uncertainty about the potential impact on exports and jobs.
  • There’s an ongoing effort by the World Diamond Council and other industry organizations to lobby for exemptions for natural diamonds from these tariffs, arguing they are a raw material not produced in the U.S., according to JCK.  

4. Current status and future outlook

  • While there was a 90-day pause on some of the higher reciprocal tariffs, a 10% baseline remains in effect, says nationaljeweler.com.
  • The situation is still evolving, and further adjustments or agreements between the U.S. and diamond-producing/processing countries may occur.
  • Some speculate these tariffs could impact the relative competitiveness of natural and lab-grown diamonds, with the potential for lab-grown diamonds to gain market share, particularly in the middle price ranges.  

In essence, the imposition of tariffs on diamonds has created a complex and uncertain environment for the global diamond and jewelry industry, prompting calls for exemptions and raising concerns about potential impacts on trade, prices, and consumer demand.

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