Tariff tussle: Jewellers stare at low US demand, job losses

MUMBAI: US President Donald Trump's decision to impose 27% tariff on gems & jewellery imports from India has put the industry on the backfoot as they expect a sharp decline in demand for their products in the world's largest export market. This in turn could also lead to job cuts in the industry that to a large extent depends on manual labour for diamond cutting, polishing and also for making exquisite jewellery.

In FY24, of the total $33 billion worth of gems & jewellery exports from India, nearly a third (about $10 billion) was to the US, official data showed. Currently, the US charges a 6% tariff on gems & jewellery from India. With an additional 27% tariff, this rate is expected to rise to about 34%, industry players said.

Unless India and US trade officials get into a bilateral export-import relationship that favours Indian gems & jewellery industry, exports to the US could fall between 30% and 50%, industry players said. The 27% tariff announced by the US was way above the industry's expectations, which has the potential to raise prices of jewellery and processed diamonds from India, and keep them out of reach for many in the US.

"Over the past few weeks, we expected some hike in tariff by the US on gems & jewellery exports from India. We were preparing for a 10-15% hike. But 27% is too high a rate," said Colin Shah, founder & MD, Kama Jewelry. "This will lead to a steep hike in cost for these Indian products for US buyers which in turn would affect demand."

A statement from Gems & Jewellery Export Promotion Council (GJEPC) also warned about the expected uphill task for Indian exporters and American consumers. "The Trump administration's announcement of a reciprocal tariff on Indian gem and jewellery exports to the US would be a significant burden on Indian exporters and American consumers alike," the statement said.