The 2025–2026 Tariff Timeline: From 50% to 18%
In mid-2025, the United States imposed a sweeping 50% tariff on Indian diamond imports as part of broader trade negotiations. The impact was immediate and severe: Indian polished diamond exports to the US dropped sharply, and Surat’s cutting and polishing units — which process over 90% of the world’s diamonds — faced their most challenging demand environment in a decade.
The early 2026 trade agreement brought significant relief, reducing the tariff to 18%. While industry bodies like GJEPC continue pushing for zero-duty treatment (similar to gold), the 18% rate restores competitiveness against Belgian and Israeli suppliers who face lower or zero tariffs under separate trade agreements. For US-based wholesale buyers, the new rate reduces landed costs by approximately 20–25% compared to the 50% regime.
Impact on Per-Carat Pricing for US Buyers
At the 50% tariff level, a parcel with a $1,000/ct CIF Surat price arrived in the US at an effective $1,500/ct before domestic handling. At 18%, the same parcel lands at $1,180/ct — a $320/ct reduction that directly improves buyer margins or enables more competitive retail pricing.
This tariff arithmetic shifts the sourcing calculus meaningfully. Indian-cut goods are once again price-competitive with Belgian and Israeli alternatives for the US market. For lab grown diamonds — where per-carat prices are already compressed to $200–$400 — the absolute tariff impact is smaller but still material at volume: 18% on $300/ct adds $54 vs $150 under the old regime.
Supply Chain Adaptation: What Changed During the 50% Period
The 2025 tariff shock forced structural adaptations that persist even after the reduction. Several major US wholesalers shifted sourcing to UAE-cut goods (which face different tariff treatment) or stockpiled pre-tariff inventory domestically. Some pivoted to Israeli or Belgian-origin certificates to avoid the India-specific surcharge entirely.
These adaptations created lasting shifts in trade patterns. The UAE — particularly Dubai — has emerged as a more prominent re-export hub for Indian-polished goods. Rachna Export now maintains bonded inventory in Dubai’s DMCC Free Zone specifically to offer US buyers alternative origin documentation and tariff flexibility. This dual-channel approach — direct from Surat SEZ or via Dubai — gives our clients the most competitive landed cost regardless of tariff fluctuations.
GJEPC’s Zero-Duty Push: What Comes Next
The Gem and Jewellery Export Promotion Council (GJEPC) has been vocal about achieving zero-duty treatment for Indian diamond exports to the US, arguing that polished diamonds should be treated as raw materials — similar to gold — rather than manufactured goods. This classification would align with EU and UAE treatment of polished diamonds.
While zero-duty remains aspirational in the current political environment, the trajectory from 50% to 18% in under a year suggests continued negotiation. Buyers should plan for the 18% rate as the baseline for 2026 while monitoring for further reductions. Rachna Export’s pricing reflects current duty rates and will adjust automatically as trade terms evolve.
What This Means for Your 2026 Sourcing Strategy
For US-based buyers: resume or expand direct sourcing from Indian manufacturers. The cost advantage has been restored. Request CIF New York or CIF Los Angeles quotes that include the 18% duty for apples-to-apples comparison with other origins.
For non-US buyers: the tariff shift primarily affects US-destined goods. European, UAE, and Asian buyers continue to source from India at existing duty rates (0% in UAE and Belgium for polished). However, the improved US market access will increase demand for Indian-cut goods, potentially tightening supply and supporting prices for high-demand categories. Secure your 2026 allocations early.