Natural Diamonds at 0% Duty - What the New Tariff Structure Means for Exporters in 2026

Introduction:

Diamond Trades Are Undergoing Dramatic Changes Diamonds have always been considered symbols of everlasting love, power, and money. However, in 2026, these gems are embroiled in a rather unsophisticated struggle of wars, sanctions, and boycotts. Indeed, today the whole structure of the diamond business that brings tens of billions of dollars annually to its participants is changing due to the decision-making processes taking place among the authorities of such countries as Russia, Israel, and the Middle Eastern states. There are three main fault lines that are currently dividing the diamond business: the growing grip of Russia on the world’s rough diamond production amid growing sanctions by Western countries; the difficulties facing the most prestigious diamond cutting and trading center located in Ramat Gan, Israel, amid ongoing Gaza conflict; and the disruption of trade connections in the Middle East as the power dynamics of the region are changing.

Executive Summary

Strategic Market Analysis – 2026

A strategic market analysis that takes into account the changing dynamics in the diamond trade around the world, particularly between two key players in the industry: India, the leading country in the cutting and polishing of diamonds worldwide, and the United States, the largest consumer market for diamonds in the world. With an understanding of the challenges brought about by mining sanctions imposed by Russia, trade disruptions in the Middle East, and changes in provenance requirements, this report will provide valuable insights for competing in this dynamic market environment.

The international diamond business is going through one of the biggest shakeups in its contemporary history. This shakeup is the result of three converging phenomena: Russia’s continued monopoly on international diamond mining; Israel’s role as a major diamond cutting and trading center under increasing geopolitical pressure; and rising instability in the Middle East region. For India, which is the leader in diamond cutting and polishing in the world, and the USA, which happens to be the largest consumer market for diamonds globally, this has enormous implications.

When Russia invaded Ukraine in 2022 and imposed Western sanctions thereafter, a seismic shift occurred in the international diamond supply chain. As part of the G7 sanctions on Russian origin diamonds, which became phased over 2023 and 2024, and continue to tighten even in 2026, the international diamond business has been forced to accept a new reality where traceability and provenance – ideas that have always eluded the structure of this business until now – have become a necessity.

Chapter 1: Russia – The Unkillable Giant

The Alrosa Question

Here’s a stat that will give you a whole new perspective on things: one single state-run company from Russia, Alrosa, accounts for about 25 to 27% of the global output of rough diamonds by weight. That’s almost a third of all diamonds mined from the earth. And come 2026, that particular company faces some of the toughest mining sanctions in history.

Following Russia’s attack on Ukraine, action was swift in the West, although not quite to plan. Restrictions have already been imposed on Russian diamonds by the United States, the European Union, and the G7 nations. In March 2026, the European Union imposed sanctions on Alrosa for “diamonds,” which they describe as “a lifeline of the Russian economy.” This decision was quickly followed by that of the United States. In theory, Russian diamonds should not be able to access the most lucrative consumer markets.

Russia’s Strategy: Pivot Eastwards, Build Inventory, Innovate

But what is Russia really doing while the Western countries seek to boycott it? Essentially, there are three actions Russia takes. Firstly, it pivots towards alternative non-Western customers. Specifically, China and the UAE appear to become important alternative buyers of Russian uncut diamonds, as these diamonds cannot legally enter Western markets anymore.

Secondly, Russia builds an inventory. The Russian national diamond reserve Gokhran continues to build its inventories – both for valuation purposes and for long-term protection against any market disruptions. And thirdly, despite sanctions, Russian mining technologies continue to evolve; AI technologies are now used for geological surveys and satellite monitoring of the Siberian mines. Thus, rather than collapsing under pressure, the Russian diamond mining sector is innovating and preparing to remain the global leader in terms of volume until at least 2026.

◆ Russia remains the largest diamond miner in the world by production volumes.

◆ Alternative buyers in Asia and the Gulf states are accepting displaced volumes.

◆ The full traceability system set up by the G7 is not yet fully functioning by early 2026.

◆ Alrosa dominates diamond extraction in Yakutia (Sakha Republic).

Chapter 2: Israel — The Hub Under FireRamat Gan: Where Diamonds Are Born 

Walk through Ramat Gan, the upscale district east of Tel Aviv, and you’re essentially walking through the nerve center of the global diamond trade. This isn’t hyperbole—the Israel Diamond Exchange, housed in a complex of four interconnected towers, is one of the most important diamond trading venues in the world. More than 15,000 people work within Israel’s diamond ecosystem, involved in cutting, polishing, importing, exporting, and marketing stones.

Israel doesn’t own a single diamond mine. Not one. And yet, between 2018 and 2023, the country exported over $60 billion worth of precious stones. Diamonds alone account for more than 15% of all Israeli exports. The secret is specialization: while India dominates the mass-market cutting and polishing of smaller stones, Israel has carved out a premium niche. Israeli craftsmen specialize in larger, rarer, higher-value diamonds — the kind that end up in flagship jewelry stores on Fifth Avenue.

The Gaza War’s Devastating Impact

When October 7, 2023 struck, the diamond industry’s troubles were only beginning. What started as a geopolitical crisis rapidly became an economic one — and by 2026, the full weight of that impact is still being felt across Israel’s diamond trade. At the peak of disruption, Israeli diamond exports plummeted by 48% year-on-year. The Israel Diamond Exchange, once one of the most dynamic trading institutions in the world, found itself in a membership freefall — where prosperous years once welcomed around 200 new members annually, that figure had collapsed to just 30 by the mid-2020s, forcing the exchange to halve its membership fees simply to keep its community intact.

The compounding pressures are impossible to ignore. Reduced international flight connectivity to Israel cut off the steady flow of foreign buyers and traders who once made Ramat Gan a regular stop on their global sourcing circuit. Consumer sentiment hardened across key Western markets, with organized boycott movements gaining serious traction in Europe. By 2026, Israeli exports to Turkey — a trade relationship once valued at $1.5 billion annually — have effectively collapsed. Exports to Ireland and several other European markets have followed the same downward trajectory. What was once Israel’s greatest commercial strength — its deep integration into Western luxury markets — has become its most exposed vulnerability.

The Ethics Question and the Tariff Blow

Compounding the market pressure is a growing ethical controversy. Critics — including legal scholars, human rights organizations, and investigative journalists — have argued that the diamond industry’s funding links to the Israeli government, including contributions to the Defence Ministry estimated at around $1 billion annually, make these stones ethically problematic in the same way conflict diamonds from war zones are. The Kimberley Process, the international certification scheme meant to guarantee conflict-free diamonds, has been criticized for not covering state-sponsored military activity — only rebel-group violence.

Then came an unexpected blow from an unexpected direction: US tariffs. The Trump administration’s 2025 tariff regime placed a 15% tax on Israeli diamonds entering the United States — Israel’s most important export market. To make matters worse, the European Union successfully negotiated a diamond exemption to their own tariff regime, meaning Belgian and European competitors now hold a meaningful price advantage in the US market that Israeli exporters can’t match.

And lurking in the background is the existential threat of lab-grown diamonds — chemically identical to mined stones but sold at a fraction of the price. Lab-grown diamonds now account for roughly 20% of total sales globally, and surveys suggest that three-quarters of American consumers would happily accept one in an engagement ring. For a country whose entire diamond identity is built on the mystique and craft of natural stones, this is a genuine long-term challenge.

◆Israeli diamond exports declined by 48% YoY during the period of maximum disruption in mid-2024.

◆A tariff of 15% is levied on Israeli diamonds in the US; EU negotiations for an exemption affected Israel’s competitiveness.

◆Membership of the Israel Diamond Exchange is in a rapid decline due to cutting fees in half to lure members.

◆Lab grown  diamonds’ share of market sales is currently 20%, forecasted to increase.

Chapter 3: The Middle East – New Routes, New Rules

The UAE’s Silent Rise

While Israel is suffering and Russia is rerouting, one nation in the Middle East has been rising steadily in its role as a diamond processing giant: the United Arab Emirates (UAE), especially Dubai. Dubai has emerged as a significant intermediary for diamond trade, as evidenced by statistics. In just one year, 2022, diamond trade between the UAE and Israel hit $1.75 billion, a sharp rise of 163% from 2021.

The UAE has taken advantage of its neutrality. Israel’s relationship with the UAE is governed by the Abraham Accords of normalization, but the UAE continues its business dealings with traders who are unwilling to purchase any Israeli processed diamonds. Africa’s rough diamond transit has been boosted by Dubai as well. With the opening of an office of the Dubai Diamond Exchange in Ramat Gan and another office of the Israel Diamond Exchange in Dubai, commercial partnerships have materialized on the ground without many of the limitations that plague European diamond trading hubs.

Red Sea Disruptions and Insurance Costs

But the Middle East’s diamond story isn’t only about opportunity—it’s also about disruption. The ongoing conflict in Yemen, Houthi attacks on Red Sea shipping, and broader regional instability have raised the cost and complexity of moving goods through traditional maritime routes. Insurance premiums for cargo passing through the Red Sea have spiked. Shipping companies have diverted vessels around the Cape of Good Hope, adding days and significant cost to journeys that include diamond cargo moving between African mines, Indian processing centers, and European or American markets.

This trade route disruption is one of the underappreciated drivers of 2026’s diamond market volatility. Efficient supply chains have been strained, and in an industry reliant on trust, reliability, and just-in-time delivery, each additional day of transit introduces risk.

Antwerp and Belgium: Observing from the Sidelines

The largest diamond trading center in Europe is Antwerp, Belgium—is a trading center. Observing all of this happens with a mix of unease and opportunities. Antwerp has always been the place where most of the world’s rough diamonds have been processed, and many of them came from Russia. With the Russian pipeline cut off and the Israeli competition reduced, Antwerp has both a supply chain problem and an opportunity to gain a competitive edge over Ramat Gan.

The tax exemption for diamond exports from the EU into the US becomes relevant here. If the processed diamonds from Europe can penetrate the US market more easily than the Israeli diamonds, then Antwerp has a real business opportunity—it offers an alternative that it can capitalize on.

◆Dubai has become the diamond transit neutral country in the Middle East, taking advantage of both parties in the geopolitical conflict.

◆Disruptions in Red Sea shipping have increased costs and delays for the diamond trade between Africa, India, and Western nations.

◆Antwerp could have an edge with the EU’s exclusion of tariffs, allowing Europe to recapture some diamond market share.

◆The Kimberley Process is increasingly pressured to broaden its scope of “conflict diamonds” to include state actors.

Chapter 4: What This Means for the Industry and for You

A Supply Chain in Permanent ReconfigurationStep back from the individual stories of Russia, Israel, and the Middle East, and a larger pattern emerges: the global diamond supply chain, whose preference was already under stress from the rise of lab-grown stones and shifting consumer preference  is now undergoing a geopolitical restructuring that may prove permanent.

The old model was relatively simple: Russia mined, India cut and polished, Antwerp and Israel traded, and America and Europe bought. That model is now cracking at every seam. Russian supply is sanctioned. Israel is under commercial pressure. India is caught between its role as the world’s polishing capital and international pressure over Russian diamonds transiting through its facilities. And the Gulf is filling the gaps, positioning itself as the new neutral ground.

The Lab-Grown Card Wild Card

And then there’s the disruptive technology from within. The process by which man-made diamonds are produced – via High Pressure High Temperature (HPHT) or Chemical Vapor Deposition (CVD) processes – has become both competitive on cost and accepted by consumers in ways once inconceivable just ten years ago. With prices coming in at only around one-tenth of natural stone prices, the young consumer who values practicality over tradition is being drawn into the fold; and with half of all lab-grown diamonds produced in China, there’s still more to consider geopolitically speaking.

For an industry whose story revolves around the rarity, eternity, and unique nature of its product, this represents something of a crisis. Russian companies like Alrosa, Israeli firms like IDE, and the diamond traders of Antwerp have to look at their lab-grown competition and ask how long the premium for natural stones will last.

Russia’s Mining Dominance – The Sanctioned Supply ChainRussia’s Monopoly Over the World Diamond Pipeline

The monopoly Russia currently holds in the diamond mining segment is not just a matter of recordkeeping but the most significant influence shaping the worldwide rough diamond pipeline in 2026. ALROSA, the Russian state-controlled diamond mining company, produces nearly one-third of all rough diamonds supplied globally in terms of volume and enjoys an even higher share in the production of gem quality diamonds. For decades, ALROSA formed the core of the world diamond pipeline, operating under long-term agreements with Indian manufacturers and foreign sightholders ensuring a steady flow of supply and moderate prices.

All that is water under the bridge. The Russian invasion of Ukraine in 2022 unleashed a massive sanctions regime whose main objective was to disrupt Russia’s control over the diamond supply chain. The multi-year series of measures initiated by the G7 countries to restrict Russian diamond imports into the West, launched in 2023, strengthened during 2024, and reaching the peak of their stringency in 2026, required unprecedented levels of traceability and supply chain integrity which the industry could not cope with until this day.

The India Connection: India’s Surat-based cutting industry historically processed substantial volumes of Russian rough — in some estimates, upward of 70–80% of Russian gem-quality output passed through Indian workshops before reaching international markets. The post-sanctions environment has forced a bifurcation: manufacturers now maintain separate compliant and non-compliant rough inventories, creating operational complexity and cost pressure.

The U.S. Client Perspective: American buyers — department store chains, branded jewelry groups, and e-commerce diamond retailers — now face due diligence obligations under OFAC (Office of Foreign Assets Control) guidelines. Requests for certificates of origin, third-party audits, and blockchain-verified provenance records have become standard vendor qualification requirements. Suppliers unable to provide documentation risk losing key U.S. accounts.