How 0% Duty on Natural Diamonds Impacts the Global Jewellery Industry

What It Means for American Jewelers & Consumers

The relief is equally palpable, although expressed differently, on the American side as well. American jewelers, manufacturers, and consumers have been quietly bearing the shock of rising costs throughout 2025. A 50% tax on imported loose diamonds negatively impacts exporters and increases the cost of every piece of jewelry made in the United States.

The Jewelers of America, an association representing over 20,000 American jewelers, was also at the forefront of the fight to secure a tax exemption for diamonds. Their reasoning was simple, yet compelling: diamonds simply cannot be sourced locally. America does not mine them, process them, or produce them in any form. We rely completely on India to provide them to us, especially cut and polished diamonds. Taxing that supply chain effectively burdens American consumers and artisan jewelers.

🇮🇳 India’s Gains

• Zero duty on loose natural diamonds entering the US
• Recovery of the world’s largest export market
• $3B estimated near-term export boost
• Revival of Surat’s processing hubs
• Structural advantage over Thailand, Vietnam, and Belgium
• Towards a goal of $100B in exports by 2047

🇺🇸 America’s Gains

• Lower costs of inputs for jewelry manufacturing
• Stable supply chain of diamond
• Competitive prices for consume
• Relief for independent US jewelers and retailers
• Stronger US jewelry sector globally
• Level playing field against European rivals

The impact on the American consumer, who is looking to purchase an engagement ring, a graduation gift, or a milestone piece, should be a more stable price environment and a broader selection. Those retailers who have reduced their margins or pulled back on inventory should, over the next few months, start to replenish inventory and raise prices.

The Unfinished Picture

It would be a disservice to the industry to suggest that this was a perfect, uncomplicated victory. It was not. This zero-duty regime applies only to loose natural diamonds and loose colored gemstones. Finished pieces of jewelry, such as rings, necklaces, bracelets, etc., continue to attract an 18% duty, reduced from a previous 50% but still relevant nonetheless.

The Lab-Grown Diamond Dilemma

Perhaps one of the biggest gaps in the zero-duty regime was lab-grown diamonds. Lab-Grown Diamonds (LGDs) continue to attract an 18% duty even as consumer demand for lab-grown diamonds continues to increase in the United States. Since lab-grown diamonds are also polished in India, the industry was vociferous in its demands for equal treatment. This has been interpreted as a protectionist measure to protect domestic lab-grown diamond producers in the US.

Industry Note

Polished lab-grown diamond exports from India were down by 9.73% in value to $923.62 million for April 2025 to January 2026, while exports were up. This highlights the price pressure faced by the LGD segment.

Tariffs on Jewelry: An Issue for Small Stones

The tariff on finished jewelry at 18% gives rise to an interesting dichotomy. Ajesh Mehta from GJEPC says that for small diamonds, setting may not be economically viable in the US at the current tariff rates. The additional cost structure makes it difficult to be price competitive. However, for larger and higher-priced stones above 1 carat and 2 carats, where the value lies in the diamond, the zero duty on the stones far exceeds the cost. In short, the policy favors premium over mass market.

The Bigger Global Picture

The India-US agreement needs to be seen in the context of a larger global picture. The fact is, India has been simultaneously pursuing a larger market diversification strategy, and the results are already visible. While US exports from April 2025 to January 2026 were in the dumps, India shifted gears and did extremely well. In fact, exports to the UAE increased by almost 24 percent, while exports to Hong Kong increased by more than 33 percent. Similarly, exports to Australia and France increased by more than 36 percent each, while Belgium, Thailand, and Israel reported double-digit growth.

The India-EU Free Trade Agreement has also given zero-duty access to gems and jewelry. The fact is, India is becoming the world’s indispensable gems and jewelry hub, not merely for the US market but for all markets.

A Word on Natural vs Lab-Grown

The trade deal also, arguably, has the effect of cementing the position of natural diamonds as being superior to lab-grown diamonds, at least to a certain extent, even if not necessarily as a direct result of the deal itself. This is because, under the deal, natural diamonds are given a zero-duty exemption, whereas lab-grown diamonds are still at 18%. This, arguably, reflects a view of natural diamonds as a raw material/mineral, rather than a manufactured item, which is more the view of lab-grown diamonds, a view that the natural diamond industry has been advocating for several years.

From the consumer’s point of view, it arguably plays into the hands of the narrative of the value of natural diamonds, the idea of them being unique, geological rarities, at a time when the prices of lab-grown diamonds have been trending downward significantly.

So, What Happens Next?

The framework is the starting point, not the finish line. The agreement still needs to be formally inked and ratified, and the industry is monitoring to ensure that the zero-duty provisions under Annexure III kick in automatically at the signing stage, rather than at the ratification stage.

For Indian diamond and gemstone exporters, the to-do list is now clear: to rebuild order books, reopen closed factories in Surat, and repair relationships with US jewelers that were severely strained during the tariff battle in 2025.

For US jewelers, it means they can at last start planning their business without the constant fear of unpredictable import duties hanging like the sword of Damocles.

But for the average consumer in the United States—maybe planning to propose marriage, celebrating a milestone, or just wanting to buy something beautiful—the agreement works quietly, behind the scenes, and in their favor.

The diamond in that ring has passed through extraordinary hands, gone through an extraordinary distance, and is now ready to shine without the weight of a burdensome tax standing in the way.

That, ultimately, is what trade policy looks like when it works. Not abstract numbers in a tariff schedule, but a craftsperson in Surat, a jeweler in New York, and a customer in between breathing a little easier.