Natural vs Lab-Grown Diamonds vs Jewelry: The 2026 Duty Comparison That Changes Everything

If you’ve been in this business for any length of time, you know that a difference of one percent in duty can mean winning a deal and losing a deal to a competitor. But in 2026, these percentages won’t be rising by one percent at a time; they won’t be rising by two percent at a time. They’ll be rising by ten percent at a time. And they’ll depend entirely on what kind of diamonds you’re selling.The new US-India trade agreement has brought something that hasn’t been seen in a long time: a three-tier structure in which natural diamonds, lab-grown diamonds, and jewelry are treated so differently. The details of this structure and the rationale behind it are perhaps the most important thing an Indian exporter of diamonds can know. So let’s look at this in a simple and honest way.

The Market That Walked In Already Changed

Let’s be honest about what the diamond market looked like going into 2026. Lab-grown diamonds had been on an extraordinary run. From just 12% of US engagement ring sales in 2019, they had climbed to nearly 48% by 2025. Prices had collapsed — a 2-carat natural diamond that would cost $15,000–$20,000 could be matched by a lab-grown equivalent for $3,500–$5,000. That is not a small gap. That is a different category of purchase.

And for Indian exporters, this shift landed at the worst possible time. As lab-grown was eroding natural diamond demand among younger buyers, the 2025 tariff shock added a 25% duty on top of everything they were already selling into the US. Two forces hitting at once. The result was a 60% collapse in Indian polished diamond exports to the United States.

But here’s where 2026 draws a new line.

Three Products. Three Very Different Tariff Stories.

Before we get into what this means strategically, let’s just lay out the comparison clearly — because once you see it in plain terms, the implications become obvious.

The pattern is unmistakable. The natural diamonds get the full elimination. Everything else gets some kind of partial relief. The rationale for this policy, as outlined in Annex III of the US Executive Order, is quite simple: only those items that cannot be produced domestically in the US are to receive zero duty. Well, natural diamonds clearly cannot be produced in New Jersey. They’ve had billions of years to incubate deep within the earth. Lab-grown diamonds, on the other hand, can most definitely be produced in New Jersey—and are.

What the duty gap means in real dollars: Policy announcements are easy. Let’s look at what this actually means for a buyer placing a real order. Let’s assume a $10,000 shipment of each category and run the numbers through the old and new tariff structure.

Landed Cost on a $10,000 Shipment – Old vs. New

For the $10,000 order, the saving is $2,500 for the natural diamond buyer, while the lab-grown buyer saves $700. While this is not a trivial difference, it is not in the same ballpark either. Extrapolating this to a $500,000 yearly business, the saving is $125,000 in landed cost for the natural diamond buyer, while the lab-grown buyer saves $35,000.

One can think about the effects of a 25% duty on a given transaction. It either reduces the exporter’s margin (margin compression), or it increases the buyer’s price (demand compression), which in practice is both. The 2025 tariff created just such an effect: Indian exporters reducing their prices to maintain competitiveness and American buyers quietly switching to either US-warehoused inventory or looking at alternative supply chains.

The following is a comparison of the scenario to illustrate the effects on a mid-size Indian exporter with a monthly order of $50,000 in natural diamonds to the US.

Think about what a 25% duty does to a transaction. Either the exporter absorbs it in their price (margin compression), or the buyer pays more (demand compression). In practice, both happen. The 2025 tariff created exactly this kind of squeeze—Indian exporters cutting margins to stay competitive and US buyers quietly switching to either US-warehoused inventory or exploring alternate supply chains.

The following scenario comparison illustrates the significant impact on a mid-size Indian exporter with a monthly natural diamond order of $50,000 into the US.

What 0% Duty Gives You That You Didn’t Have Before

Flexibility in prices is not just about lowering prices; it’s about having alternatives. Indian exporters of natural diamonds had just one option with a 25% duty overhang: either accept it or lose the sale. The 0% option now creates a new set of possibilities.

Compete on quality, not just cost

When duty is no longer the key driver, buyers begin to think in terms of what really matters: the quality of the cut, consistency, certification, speed to market, and terms of payment. This is where Indian exporters have a chance to win.

Price at international parity—and mean it. itWith natural diamonds now entering the US at 0% from India, the landed price is directly comparable to Belgian or Israeli supply. Indian exporters can quote confidently without the buyer mentally adding a 25% penalty.

Hold your margin on larger stones: Larger natural diamonds (1 ct+) were particularly brutalized by the tariff—a 25% duty on a $20,000 stone is $5,000. At 0%, that $5,000 is either pocketed as margin or used to sweeten the deal for a loyal buyer. Either way, it’s back in your control.

Differentiate on credit terms

Exporters from India have traditionally offered credit terms of 60 to 180 days, which are generally not available from competitors such as Belgians or Israelis. Add this to the duty-free benefit, and it becomes a compelling single-source solution for US buyers.

Test volume pricing models

Now that the tariff cost is out of the equation, there’s an opportunity to test volume-based pricing models without the discounts completely eroding your profit.