Surat's diamond trade faces peril from US tariffs

Surat, India, is witnessing a significant downturn in its diamond industry, which is largely due to recent economic policies and evolving market conditions. The city, known for cutting and polishing four out of five diamonds worldwide, has been deeply affected by tariffs imposed by the United States as part of trade negotiations under President Donald Trump's administration. In a landscape where businessmen conduct transactions casually along narrow streets, the complexity of purchasing and credit systems is stark. Once thriving, the industry's fortunes are now jeopardized as the 10% tariffs cut into profits, compounded by a potential even steeper 27% tariff delay. This situation further complicates the import-export dynamics that are integral to the Surat diamond industry. Additionally, the rise of lab-grown diamonds has shifted consumer preferences, putting further pressure on traditional diamond sales. India's diamond exports to the U.S., which accounted for around 30% of gem and jewelry shipments in 2023-24, largely consist of diamonds that are cut and polished in Surat. The implications of these tariff changes reverberate throughout the supply chain, given that grading institutes mainly operate from the U.S., meaning the diamonds cross international borders multiple times before reaching consumers. As reputation holds substantial weight among traders, the existing unwritten code and trust built over years are essential. The outlook for the industry remains uncertain, suggesting that the repercussions of current policies may shape the future landscape of diamond trading in Surat and beyond.