Shocking Tariff Hike: 27% US Duty Threatens $10 Billion Indian Jewellery Exports – Major Job Losses Loom

The recent decision by US President Donald Trump to impose a steep 27% tariff on gems and jewellery imports from India has sent shockwaves through the industry. This move is expected to significantly hurt exports to the US, which is India’s largest market, accounting for about $10 billion of the $33 billion total exports in FY24. With the new tariff, the total duty could soar to around 34%, making Indian jewellery and processed diamonds much more expensive for American buyers. Industry leaders are concerned this could lead to a 30–50% drop in exports and put thousands of jobs at risk, especially in sectors dependent on skilled manual labour like diamond cutting and polishing.

Colin Shah of Kama Jewelry said the industry was prepared for a modest hike, but the 27% rate is far beyond expectations. The Gems & Jewellery Export Promotion Council also warned that both exporters and US consumers will bear the brunt of this sudden tariff increase. Experts are urging trade officials from both countries to engage in dialogue to avoid long-term damage. Without a favorable trade agreement, the impact on this vital export sector could be severe and lasting.

Shocking Tariff Hike: 27% US Duty Threatens $10 Billion Indian Jewellery Exports – Major Job Losses Loom

India’s gems and jewelry sector is bracing for turbulence after the U.S. government announced a sharp tariff hike on imports from India, raising concerns over a potential collapse in demand from its largest market. The decision, spearheaded by former U.S. President Donald Trump, imposes a 27% duty on these goods—a move that could push total tariffs to nearly 34%, up from the current 6%. Industry leaders fear this drastic increase will make Indian products prohibitively expensive for American buyers, leading to a steep decline in exports and risking thousands of jobs.

The Numbers Behind the Crisis

In the 2023–24 financial year, India’s gems and jewelry exports totaled $33 billion, with the U.S. accounting for nearly one-third of this figure at $10 billion. The sector, a cornerstone of India’s export economy, relies heavily on intricate craftsmanship, particularly in diamond cutting, polishing, and jewelry design. These processes depend on skilled artisans, many of whom work in small-scale workshops or family-run businesses across states like Gujarat and Maharashtra.

The proposed tariff hike, however, threatens to disrupt this ecosystem. With import duties set to rise from 6% to 34%, Indian exporters worry American retailers and consumers will turn to cheaper alternatives from other countries or reduce purchases altogether. Industry analysts predict exports to the U.S. could plummet by 30–50% in the coming year if the tariffs take effect. Such a drop would not only dent India’s foreign exchange earnings but also put at risk the livelihoods of millions of workers—many from rural areas with limited alternative employment options.

Industry Voices Raise Alarm

Colin Shah, founder and managing director of Kama Jewelry, expressed shock at the scale of the tariff increase. “We anticipated a modest rise of 10–15%, but a 27% jump is unprecedented,” he said. “This will make our products far less competitive in the U.S., where price sensitivity is high, especially for non-essential luxury items.” Shah emphasized that while larger firms might absorb some of the costs temporarily, smaller businesses could face closure, worsening unemployment in an already fragile economy.

The Gems & Jewellery Export Promotion Council (GJEPC), a key industry body, echoed these concerns. In a statement, the council warned that the tariffs would hurt both Indian exporters and American consumers, who may see retail prices surge. “The U.S. market has been a lifeline for our industry,” the GJEPC noted. “A sudden cost escalation could disrupt supply chains and force U.S. buyers to shift to other markets like China or Thailand, where labor costs are lower or tariffs are more favorable.”

Why the U.S. Market Matters

The U.S. has long been a critical destination for Indian gems and jewelry, prized for their quality and craftsmanship. Diamonds, in particular, form a major chunk of exports, with India processing over 90% of the world’s rough diamonds. However, the sector operates on thin margins, with profitability closely tied to global demand and trade policies. Even a slight increase in costs can render shipments unviable, forcing exporters to either cut jobs or reduce production.

The timing of the tariff hike adds to the anxiety. The industry is still recovering from pandemic-era disruptions, which saw exports drop by 20% in 2020–21. A sudden loss of the U.S. market could reverse recent gains, including the rebound to pre-pandemic export levels in 2023.

Calls for Diplomatic Resolution

In response to the crisis, the GJEPC has urged Indian and U.S. trade officials to negotiate a compromise. “This isn’t just about tariffs—it’s about preserving jobs and a centuries-old craft,” the council stated. They propose revisiting trade agreements or offering phased tariff reductions to ease the burden on businesses.

However, resolving the issue won’t be straightforward. The U.S. has framed the tariffs as part of a broader strategy to address trade imbalances and protect domestic industries. For India, balancing diplomatic negotiations with immediate economic damage control will be crucial.

What Lies Ahead

If no solution emerges, the repercussions could extend beyond exports. The gems and jewelry sector employs over 5 million workers directly and indirectly, many from economically vulnerable communities. Job losses could ripple through local economies, affecting everything from education to healthcare spending.

Moreover, India’s position as a global diamond hub could weaken. Countries like Belgium and Israel, with advanced technology and lower export dependencies on the U.S., might capitalize on the vacuum. Indian exporters, meanwhile, may be forced to explore alternative markets in Europe, the Middle East, or Asia—though building these connections could take years.

For now, the industry remains in a holding pattern, hoping for a negotiated truce. As Colin Shah put it, “Our craftsmanship is unmatched, but without fair access to the U.S. market, even the best artisans can’t survive.” The coming months will test not just the resilience of India’s gems and jewelry sector but also the strength of Indo-U.S. trade relations.