In his debut article for Solitaire, diamond analyst Avi Krawitz dissects the implications of US tariffs, exploring how these measures are creating fresh headwinds and uncertainties for the global diamond trade, ultimately impacting everything from supply chains to consumer sentiment.
The global diamond trade is once again facing disruption — this time not from lab-grown diamonds or weakening demand in China, but from trade policy.
On 2 April, President Donald Trump announced a 10% tariff on most goods imported into the United States. Higher reciprocal tariffs on certain countries were set to follow on 9 April but were paused at the last minute for 90 days, offering brief relief to the diamond and jewellery trade.
Yet the industry is still subject to the initial 10% rate hike, and that has wide-reaching implications.
In the weeks before 2 April, most of the tariff talk in the diamond world felt distant. The assumption was that other industries — metals, cars, electronics — would take the brunt. The jewellery sector’s main concern was that inflationary pressure would dampen consumer sentiment and shrink discretionary spending.
That remains the core risk. The health of the US consumer — who accounts for more than half of global diamond jewellery demand — is still the industry’s most important variable. If households start feeling the pinch from higher prices on everyday goods, that translates into tighter budgets for luxury purchases.
Demand, Not Duties
Even though the higher reciprocal tariffs didn’t go into effect, the threat alone caused ripples through the trade. As a result, the week of 2 to 9 April saw a frantic push to ship goods, and polished diamond prices edged upward as dealers priced in higher import costs. The trade, long frustrated by stagnant prices, might have briefly welcomed the uptick — but it wasn’t driven by demand or supply constraints. It was pure cost inflation.
And therein lies the risk: If prices rise without a shift in supply-demand fundamentals, they’re unlikely to hold. Higher prices may help manufacturers preserve margins, but without a consumer willing to spend more at retail, the squeeze will simply shift downstream.
Even before the tariff saga, mid-market jewellers were struggling. Consumers have gravitated either toward affordable options or high-end pieces, leaving a hollowing middle. Tariffs are likely to exacerbate this trend. Retailers may attempt to pass on higher costs, but in a price-sensitive environment, that’s a tough proposition.
The result is that we will likely see continued bifurcation in the US jewellery market, with more volume shifting to the luxury and budget ends of the spectrum.
Long Term Gain?
That’s not to say tariffs are inherently negative. Proponents argue they could boost US manufacturing, encourage local sourcing, and provide leverage in trade negotiations.
Still, don’t expect a US diamond-cutting renaissance. India remains dominant in manufacturing, and southern Africa’s beneficiation centres will continue to attract investment.
Where we may see growth is in the US secondary market. Recycled jewellery — diamonds and gold sold to pawnshops and refinished for resale — is an underappreciated resource. Tariffs could increase its relevance, particularly as consumers seek better value and retailers look for alternative inventory sources.
President Trump has framed the tariffs as short-term pain for long-term gain. Here again, the tariff advocates argue that the trade negotiations will ultimately result in greater prosperity for US households, who will then spend more on diamond jewellery.
That may be so. Time will tell if the strategy pays off.
For now, though, the situation is fluid and is likely to remain volatile over the next few months while the administration negotiates new reciprocal rates with individual countries. Therein lies some risk for the diamond and jewellery trade. It may result in varying cost structures, depending on one’s source of supply, if different countries agree upon different duties.
Appeal for Exemption
The World Diamond Council (WDC) has urged the administration to exempt natural diamonds from the tariffs, warning of the economic fallout.
The group emphasised that tariffs would act as a consumption tax, raising prices on engagement rings, anniversary gifts, and other sentimental purchases. With the $91.5 billion US jewellery industry and more than 193,000 retail jobs at stake, the WDC argued that price hikes could choke demand at a delicate moment.
“Retailers are already reporting concerns about inventory pressures,” the WDC noted. “The uncertainty is beginning to translate into higher prices for consumers.”
Back to the Consumer
Indeed, recent data suggests a cooling in consumer sentiment. The Conference Board’s Consumer Confidence Index fell 7.9 points in April, returning to levels last seen during the pandemic. Expectations around job prospects, business conditions, and household income all declined.
The National Retail Federation forecasts retail growth will slow to between 2.7% and 3.7% in 2025, down from 8.1% in 2024. Meanwhile, inflation-adjusted US personal consumption on jewellery and watches fell 5% year-on-year to $89.7 billion in the first quarter, according to the Bureau of Economic Analysis.
That’s where the focus must remain. Tariffs may shift margins and reorder supply chains, but they don’t change the fundamental challenge facing the diamond industry: stimulating consumer demand.
In a landscape already complicated by lab-grown diamond competition, a soft Chinese market, and economic uncertainty, US tariffs add yet another headwind.
The trade must continue to make the case for natural diamonds — through storytelling, innovation, and delivering value. Markets will fluctuate and policy may shift, but the mission remains: Keep natural diamonds top of mind to win back the hearts — and wallets — of consumers – regardless of the external economic and geopolitical factors at play.
Avi Krawitz is the Founder of The Diamond Press and a leading content creator and consultant in the diamond industry. He is widely recognised for his insightful analysis and storytelling, offering clarity to both industry professionals and curious consumers navigating a complex and evolving market. See more of Avi’s work at www.thediamondpress.com