Gems and jewellery exporters fear sharp decline in $10bn US trade following Trump’s 25% tariffs

India’s gems and jewellery industry is facing significant challenges after U.S. President Donald Trump announced a 25 percent tariff on Indian imports effective August 1. The move, which was announced alongside unspecified penalties related to India’s purchase of Russian oil and defence equipment, adds further pressure to a sector already grappling with soft global demand and costlier shipping.

The tariff will be accompanied by an unspecified penalty linked to India’s purchases of Russian oil and defence equipment.

The U.S. is India’s single largest export market for gems and jewellery, accounting for nearly 30 percent of the industry’s total outbound shipments—worth around $10 billion annually. Industry bodies have warned that the added tariffs will reduce competitiveness, increase the risk of order cancellations and weigh heavily on cash flow for smaller manufacturing units.

Which segments of India’s gem and jewellery industry are most exposed to the new US tariffs and how large is the US trade base?

The Indian gems and jewellery sector recorded exports worth nearly $32 billion in FY 2023–24, with the U.S. market contributing the largest share. Exports to the U.S. largely consist of cut and polished diamonds, studded gold jewellery and fashion pieces, much of which is produced by micro, small and medium-sized enterprises (MSMEs) across hubs in Gujarat and Maharashtra.

Surat, Mumbai and SEEPZ (Santa Cruz Electronics Export Processing Zone) in Maharashtra host thousands of manufacturing units that depend on steady U.S. demand. According to the Gem & Jewellery Export Promotion Council, India’s overall gems and jewellery exports fell 11.72 percent to USD 28.5 billion in FY 2024–25 from USD 32.2 billion in FY 2023–24, reflecting softer global demand even before the latest U.S. tariffs.

How is the GJEPC and wider industry responding to the tariff escalation and what relief measures are being sought?

The Gem & Jewellery Export Promotion Council (GJEPC) has flagged the new U.S. duties as a major threat to India’s jewellery exports and has urged the Government of India to fast-track relief. The council has asked policymakers to pursue interim measures, including early-harvest tariff exemptions for key product categories, while broader India–US trade negotiations are ongoing.

Industry representatives said they have engaged with senior Commerce Ministry officials to outline the scale of potential losses if the tariffs remain in place for an extended period. Many stakeholders believe the tariffs could weaken India’s export competitiveness and lead to job losses in a sector that employs millions directly and indirectly.

What immediate impact are exporters reporting on orders, margins and labour conditions in Surat and Mumbai hubs?

Exporters in Surat and Mumbai have begun to see disruptions in order flows. Some manufacturers reported that buyers in the U.S. are delaying or cancelling shipments that were previously booked, while others are seeking substantial price reductions to offset the higher duties.

Margins are already under pressure due to a combination of subdued global demand and currency volatility. Exporters warned that a prolonged tariff regime could force units to scale down production, delay capital expenditure and, in some cases, trim workforce to preserve viability.

Can diversification to new markets or recently signed FTAs offset the expected losses from the US market?

Industry observers noted that diversification efforts are underway. The recently concluded India–UK Free Trade Agreement is expected to open fresh opportunities for exporters, while initiatives are also being pursued in Middle Eastern and African markets.

However, exporters cautioned that it will take time to build the necessary buyer relationships and logistics infrastructure to substitute for the U.S. market. Analysts said that any meaningful gains from market diversification are likely to be gradual and may not offset near-term losses from the 25 percent U.S. tariffs.

What happens if the 25% tariffs remain in place well into 2025?

Trade experts cautioned that if the tariffs remain unchanged over the medium term, the sector could see a structural reduction in exports to the U.S. Exporters would likely be forced to realign their product mix and geographic focus, which would be challenging given the U.S.’s share in overall demand.

Industry bodies believe that early relief in the form of tariff waivers or partial exemptions for specific product categories is critical to preventing deeper disruption. Without such measures, they warn that small and medium-sized units may not be able to sustain production levels, potentially resulting in wider economic ripple effects.