Trump Tariffs Threaten To Disrupt the Global Gemstone Market

On April 2, 2025, President Donald Trump announced a series of sweeping tariffs targeting numerous countries, allegedly to correct longstanding trade imbalances and promote domestic manufacturing. These measures include a baseline 10% tariff on all imports, with significantly higher rates for specific nations: China faces a 34% tariff, Thailand 37%, India 26%, and the European Union 20%. While these tariffs encompass a broad range of goods, they threaten to have a substantial impact on the global gemstone market, given the intricate and international nature of this industry.

Global Gemstone Supply Chains Disrupted

The gemstone market is emblematic of globalization, with raw materials often sourced from one region, processed in another, and sold in a third. For instance, rough diamonds mined in Africa might be cut and polished in India or China before being sold in the U.S.

Tariffs disrupt this delicate balance, introducing inefficiencies and additional costs at multiple stages of the supply chain. Companies may need to reevaluate their sourcing and manufacturing strategies, potentially seeking new partners. President Trump claims that the tariffs will spur investment in domestic capabilities, but he makes no mention of how developing new supply chains requires significant time and capital.

India's Gemstone and Jewelry Industry: A Direct Hit

India stands as a central hub in the global gemstone and jewelry sector, with exports totaling approximately $32 billion annually. The United States is India's largest market, accounting for nearly $10 billion of these exports. The newly imposed 26% tariff by the U.S. - much higher than anticipated - poses a significant threat to this trade relationship. Given that India's diamond cutting and polishing industry employs millions, the tariffs could lead to substantial job losses and economic hardship.

Reuters reported that India is negotiating with the Trump administration to reduce or eliminate the tariffs to protect its exports.

China's Role and the Ripple Effect on Gemstone Trade

China, facing a 34% tariff, is another major player in the gemstone market, particularly in the processing and export of various gemstones. The heightened tariffs are likely to disrupt supply chains, increase costs for U.S. importers, and potentially lead to higher prices for consumers. This could result in U.S. businesses seeking alternative suppliers or markets, thereby reshaping global trade routes and partnerships within the gemstone industry.

In reaction to the new Trump tariffs, China announced it will add a reciprocal 34% tariff to US imports. Despite the fact that this was foreseeable, Trump tweeted that China has "played it wrong." It is unclear whether the Trump Administration will further escalate the trade war with China.

Thailand: A Vital Player Facing New Trade Barriers

Thailand, often regarded as one of the world's foremost gemstone trading and processing centers, faces a 37% tariff. It will also feel the heat, with the tariffs costing upward of 359 billion baht and reducing GDP by 2% according to the University of the Thai Chamber of Commerce.

Known for its expertise in colored gemstone cutting — particularly rubies and sapphires — and for being a major hub in the global gemstone trade, Thailand exports a significant volume of finished gemstones and jewelry to the U.S.

Many small and mid-sized enterprises in Bangkok's gem districts rely heavily on U.S. orders, and uncertainty around trade policy could lead to reduced investment, shifts in production strategies, or layoffs. Additionally, since Thailand often serves as a transshipment point for stones from Myanmar and Africa, disruptions in trade flow could ripple across neighboring supply networks, compounding the effects globally.

Impact of the Trump Tariffs on U.S. Jewelry Retailers and Consumers

For U.S.-based jewelry retailers and manufacturers, these tariffs mean increased costs for imported gemstones and related products. Businesses may face tough decisions: absorb the additional costs, thereby reducing profit margins, or pass them on to consumers, which could lead to decreased demand. Small and medium-sized businesses might be particularly vulnerable, lacking the financial resilience to weather such increased costs.

One US-based jeweler, who agreed to speak on condition of anonymity, said that he had multiple orders in progress with stones he planned to source from Thailand. The tariffs would mean those projects are now loss-making, and it is not a loss his business can readily absorb. However, he isn't sure the consumer will swallow the new, higher cost either.

"It's a mess," he said.

Global Trade Retaliation and Economic Uncertainty

The imposition of these tariffs has already elicited strong reactions from affected countries. The European Union, China, and other nations have signaled intentions to implement countermeasures. Such retaliatory actions could further escalate trade tensions, leading to a tit-for-tat scenario that may engulf multiple industries, including the diamond and gem markets.

This environment of uncertainty can deter investment, disrupt long-term contracts, and hinder the stability that businesses rely upon. Mom-and-pop jewelers, already struggling to manage the disruption caused by lab-gown diamonds, will face additional pressure from these tariffs.

Future of the Gemstone Industry Post-Tariffs

In the long term, these tariffs could catalyze a restructuring of the global gemstone market. Countries adversely affected may seek to diversify their export markets, reducing reliance on the U.S. Conversely, U.S. companies might explore domestic alternatives or invest in other countries with more favorable trade terms. Such shifts could lead to the emergence of new trade alliances and alter the competitive landscape of the gemstone industry.

Conclusion: Navigating the Tariff Impact on Gemstones

President Trump's tariffs, particularly those targeting key players in the gemstone market like India and China, are poised to have profound effects on the global gemstone industry. From disrupting established supply chains and increasing costs for U.S. businesses and consumers to prompting potential retaliatory measures and strategic realignments, the ramifications are extensive for an industry already struggling due to the rise of lab grown diamonds.