US tariff 50% hike: Indian diamond, jewellery traders hit; orders cancelled, layoffs begin

AMRITSAR: The imposition of an additional 25% US tariff on Indian goods, effective August 27, raising the total duty to 50% when combined with an earlier 25% tariff imposed by the Trump administration, has dealt a severe blow to diamond as well as gold jewellery traders in Amritsar and those based in the United States.The imposition of a 50% tariff on diamond exports has resulted in the cancellation of orders ahead of the festive season, with many laying off their staff. Security agencies here apprehend a rise in hawala trade in the near future. While expressing concern over the recent tariff hike, Prem Kumar, a diamond exporter to the US here said, “Eis Diwali legata hai Diwala nickel jayega hamara" (This Diwali, it feels like we're heading toward bankruptcy).

He informed that many US-based importers have cancelled their orders due to the 50% increase in the landing cost of Indian diamonds, as customers are unwilling to pay higher prices. Instead, buyers have begun shifting their attention to alternative markets such as Thailand and the Middle East. “This unprecedented cost surge will not only affect our business but also severely impact our workforce,” he added. Avi Dandiya, a US-based diamond merchant with over 30 years of experience, informed that the 50% surge in diamond prices due to recent tariffs has made it necessary to renegotiate contracts with clients, which he said is an extremely challenging task.

“A client who has booked an item for US $100 will not be willing to pay US $150 for the same. Instead, they will wait for a better offer,” he said. He explained that the diamond industry is typically the first to suffer during inflationary periods and the last to recover. Highlighting that India is the third-largest exporter of diamonds to the US, Dandiya warned that the downturn will severely impact exporters across the board—whether small, medium, or large.

“I fear this crisis may lead to an increase in suicides and bankruptcies, as many diamond traders have taken loans worth crores from banks. With mounting pressure for repayment and a wave of cancelled orders, many will simply be unable to pay back their debts,” he said with deep concern. A senior intelligence official here, speaking on condition of anonymity, expressed concern over a potential surge in hawala transactions, an underground financial network, which he claimed they have struggled hard to keep under control. “If we talk about diamonds alone, foreign clients will start demanding under-invoicing. To settle full payments with exporters in India, they could resort to hawala channels. This would not only fuel illegal trade but may also reopen dangerous pathways for arms and drug trafficking,” he warned. Meanwhile, Avi, who is in India, informed that on Wednesday, a Surat-based diamond firm laid off its 100 workers without any intimation or benefits.