← External Forces: Trade, Geopolitics & Market Access (all topics)
US reciprocal tariff - gems & jewellery
What it is
US tariffs on Indian goods reached 50% from 27 Aug 2025, hitting an industry that earns ~80% of revenue from exports with the US over 40% of global polished diamond demand. Cut and polished diamond exports to the US fell over 60% year on year in Apr-Dec 2025
The Feb 2026 India-US interim framework provides zero-duty access for natural diamonds and coloured gemstones, though lab-grown diamonds remain at 18%
Impact on industries
- The damage was severe and rapid - CPD exports were projected to fall 17-20% in FY26 to around $11bn, in an industry operating on single-digit margins
- Zero-duty access under the Feb 2026 framework restores competitiveness in natural diamonds, where India processes over 90% of world polished volume
- Lab-grown diamonds were excluded and remain at 18%, precisely the segment where US consumer preference is growing fastest
- India-UK CETA and UAE CEPA diversify away from US dependence, though the episode showed how completely a decision unrelated to the industry can reset export economics