Tariffs: Will They Change Everything?
April 03, 25
This changes everything. Or does it? Today Trump's newly-announced tariffs feel like a body blow to the diamond industry. But what about tomorrow or the day after?
Loose stones entering the US from India are currently zero-rated. From next Wednesday they'll attract a 26 per cent surcharge (maybe even 27 per cent, there's a disparity between the chart Trump displayed during his speech and the figure provided later by the White House).
Either way the tariffs will inevitably impact a country that has a near-monopoly on diamond polishing globally, but that's already being hit by weak demand, falling prices, the rise of lab growns and, as of this week, industrial action by some diamond workers.
It will have an impact far beyond India, of course, with baseline tariffs of 10 per cent for almost all the US's trading partners, and additional tariffs of as much as 50 per cent for those already surcharging US imports.
Trump said yesterday that he was addressing an age-old injustice. "For nations that treat us badly, we will calculate the combined rate of all their tariffs, non-monetary barriers and other forms of cheating," he said.
"And because we are being very kind . . . we will charge them approximately half of what they are and have been charging us."
He singled out a number of countries in particular, including India, as he detailed the reciprocal tariffs. "The prime minister just left," he told officials and journalists gathered at the White House Rose Garden.
"And he's a great friend of mine. But I said, you're a friend of mine, but you're not treating us right.
"They charge us 52 per cent. You have to understand, we charged them almost nothing for years and years and decades."
Does this actually change everything? In the cold light of day, maybe not. Trump has a history of making high-stake demands as a negotiating strategy, only to back down later.
The tariffs could feasibly push India to negotiate a Free Trade Agreement with the US, or a similar deal that could potentially reduce duties on both sides.
"We're pretty hopeful that India could land a trade deal with the US in the next few months," said Shaunak Parikh, vice chairman of the Gem and Jewellery Export Promotion Council (GJEPC).
"So, we just need to push through this tough phase for a little while longer."
The US is India's biggest market for gem and jewelry sales, representing over 30 per cent of the $32bn it generates annually.
"The Indian government should . . . look at lowering tariffs on US goods exported to India," said Colin Shah, managing director of Kama Jewelry, a major diamond manufacturer, in response to the tariff announcement.
He said the tariffs were "retaliatory", and if India reduced the surcharges it imposes on goods imported the US, the US would respond in kind.
Many things in life aren't quite as bad as they first seem. The dust has yet to settle on what Trump has called "Liberation Day".