The Indian gem and jewellery sector, a cornerstone of the nation’s export economy, now finds itself staring into a vexed tariff situation. US President Donald Trump has added an additional 25% over and above the 25% imposed last week, sending shockwaves through an industry already reeling from a prolonged global economic slowdown.

The implications are dire: thousands of workers, especially in the diamond-cutting and polishing hubs of Surat, face uncertainty. The initial 25% tariff had already begun prompting Indian exporters to scout for alternative export routes via countries like Mexico and the UAE. But the announcement of an additional 25%, reportedly linked to India’s diplomatic alignment with Russia, threatens to bring operations to a halt, setting the stage for uncertainties and a severe dent in foreign exchange earnings.

India exports nearly $10 billion worth of diamonds and jewellery to the United States annually - including $3.5 billion in finished jewellery and $6.7 billion in gem-quality diamonds. With 55% of India’s exports to the US now impacted, Indian businesses are at an estimated 30–35% disadvantage compared to competitors. Sectors like shrimp and organic chemicals have also been hit hard, but the blow to gem and jewellery, due to its labour intensity and regional concentration, is particularly severe.

A Wider Trade Tussle

The new tariffs are part of a larger trade dispute. India has seen the highest tariff increases among BRICS countries, despite being one of the US's significant trading partners. As per FY25 estimates, India's exports to the US are projected at $86.5 billion, with imports at $45.7 billion. The imbalance and the punitive measures have prompted urgent recalibrations across industries.

Survival or Strategic Exit?

For now, Indian manufacturers are focusing on staying competitive — even if it means offshoring. The cost of re-establishing operations overseas may be steep, but with the US market accounting for a lion’s share of exports, the industry cannot afford to lose access.

Jewellers and exporters are pragmatic: global supply chain agility is no longer a competitive advantage — it is an existential necessity. As India’s economic diplomacy grapples with the geopolitical headwinds, the gem and jewellery sector serves as a cautionary tale of how swiftly global trade can reshape domestic livelihoods.