Diamond Tariffs: What You Need To Know RIGHT NOW
- Rayah Levy, FCD Invest President
- 1 minute ago
- 4 min read
What are tariffs?
A tariff is a tax imposed by a government on goods and services imported from other countries, usually calculated as a percentage of the price or as a fixed amount per unit.
Tariffs are designed to make imported goods more expensive, which can encourage consumers to buy domestic products instead. Governments use tariffs for different reasons, including raising revenue for the government, protecting domestic industries from foreign competition, or utilizing them as a negotiating tool in foreign policy or trade disputes.
Tariffs on the Diamond Industry
The diamond industry is currently facing some of the most aggressive tariffs in its history, particularly in the United States, which is the world’s largest market for polished diamonds.
Current US Tariffs Impacting the Diamond Trade
As of August 2025, the US has imposed a 50% tariff on polished diamonds imported from India, up from 25%, as a punitive response to India’s trade with Russia.
For most other countries, a baseline 10% tariff applies to both rough and polished diamonds entering the US, with certain countries like China facing tariffs as high as 125%.
Canada can be exempt from tariffs (0%) if diamonds are both mined and polished there, complying with the US-Mexico-Canada Agreement; otherwise, a 25% or 10% tariff applies based on product transformation and origin.
The tariff rate for diamonds from South Africa is set to rise to 30% from August 2025, and Thailand, another key gem producer, will see rates increase to 36%.
Effects on the Global Supply Chain for the Diamond Retail and Wholesale Markets
Over 90% of all diamonds cut and polished in the world come from India, so the 50% US tariff is severely disrupting international trade, leading to price increases, shipment delays, and job losses in India and ripple effects throughout the global supply chain.
The tariffs have caused US diamond retail prices to rise by 8% to 10% on average since the announcement.
Retail diamond prices in the US have increased 8–10% since news broke of the 50% tariff on diamonds from India, but this is also coupled with sliding global prices in many diamond categories, especially for smaller stones.
With aggressive tariffs, the US is now less attractive as a destination for investment-grade diamonds compared to other assets like gold, which remains untariffed.
Industry experts note that these levels of tariffs are “beyond [industry] control,” and that even a 25% tariff erodes already slim margins for most diamond traders.
The diamond industry’s complex, multinational supply chain means that small tariff changes can have huge consequences for global trade, prices, and employment, especially when major processing countries like India face sharp increases in US tariffs.
US Tariffs Impact on Diamonds as an Investment
While the retail and wholesale diamond markets have been facing complications and uncertainty, the market for diamond investments has been steady and thriving. Uncertainty from tariff policies has led to supply chain disruptions, delays, and a growing price gap for US-located versus overseas diamonds are driving price appreciation. So, how is this good for investors?
US tariffs on diamonds can benefit certain diamond investors by reducing new import competition, increasing the value of in-country inventory, and creating strategic opportunities for US-based holders and sellers of diamonds. Diamonds already located within the United States (not subject to new import duties) can command a premium, especially when global tariff rates are steep.
Tariffs disrupt global diamond supply chains (notably India, Belgium, and South Africa), creating temporary shortages or delays in new stock. This can elevate the scarcity value of existing diamonds held by US investors. As new imports become more expensive, sellers may benefit from widened margins if retail prices rise, or at least maintain strong price floors. The gap between the asking prices for US-based versus offshore inventory has widened, sometimes by several percentage points, enhancing the value proposition for US-held investment-quality diamonds. During supply disruptions, larger or rare fancies in the US market tend to outperform more common small diamonds, giving additional pricing power and resilience to investors specializing in rarities.
Domestic diamonds serve as a hedge against sudden international supply chain shocks or policy changes. For portfolio investors, this can enhance diversification benefits and reduce exposure to trade-driven volatility.
Latest News
On September 5th, President Trump signed an executive order offering some tariff exemptions as soon as Monday to trading partners who strike deals on industrial exports such as nickel, gold, and other metals.
His latest order identifies more than 45 categories for zero import tariffs from "aligned partners" who clinch framework pacts to cut Trump's "reciprocal" tariffs and duties imposed under the Section 232 national security statute. In the order, Trump says his willingness to reduce tariffs depends on the "scope and economic value of a trading partner’s commitments to the United States in its agreement on reciprocal trade" and U.S. national interests.
The cuts cover items that "cannot be grown, mined, or naturally produced in the United States" or produced in sufficient volume to meet domestic demand.
The order amends Annex II of Executive Order 14257, which lists the products exempted from the reciprocal tariffs. Please refer to the below CSMS # 66151866. The changes include:
Newly added exemptions, various types of gold (powder, bullion, leaf), critical minerals, and certain pharmaceutical products
Goods removed from the exemption list and now subject to tariffs, such as aluminum hydroxide, resins, and silicones
The EO also includes a list of “Potential Tariff Adjustments for Aligned Partners” in Annex III (PTAAP Annex) goods for which the President may only apply the Most-Favored Nation (MFN) tariff rate based on negotiation of future trade deals, according to the White House Fact Sheet.
*Loose stones, diamonds, and semi-precious stones are classified under Annex 3, which is currently not exempt from tariffs. Exemptions may still apply in the future, depending on the specific tariff agreements each country establishes with the United States.
Please email FCD Invest at info@fcdinvest.diamonds to discuss your personalized long-term investment strategy.
For more information on Fancy Color Diamonds as an investment, please visit our Fancy Color Diamond information page linked here.
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