The US Tariff Diamond Crisis

Imagine a tariff dispute that had nothing directly to do with diamonds at all, a disagreement over India's continued purchase of Russian oil, ending up as one of the most severe blows India's diamond cutting and polishing industry has faced in decades, simply because the retaliatory tariff mechanism the US chose to use happened to fall heavily on Indian gem and jewellery exports. That's genuinely what happened through 2025, a geopolitical dispute becoming an industry-specific crisis almost by side effect.

The tariff escalation happened in two distinct steps, an initial 27% reciprocal tariff imposed in April 2025, followed by an additional 25% tariff specifically tied to India's continued Russian oil purchases, together pushing the total tariff on Indian goods, diamonds prominently among them, to 50%, since the US accounts for more than 30% of India's total gem and jewellery exports.

The economic damage showed up quickly and severely, cut and polished diamond exports slumped 22.7% to $2.84 billion in the April-June 2025 quarter alone, and industry estimates put Surat job losses at roughly 1.5 lakh workers, with warnings that figure could climb toward 150,000 to 200,000 in the absence of a trade deal reducing the tariff burden.

This crisis fell specifically and disproportionately on the natural diamond side of Surat's industry, since natural stone exports to the US were what the tariffs directly targeted, adding a genuinely severe additional pressure on top of the structural shift toward lab-grown diamonds covered elsewhere on this site, meaning Surat's natural diamond workforce has faced two compounding pressures simultaneously, a shrinking natural diamond market globally and a specific, severe US tariff shock layered directly on top of it.