U.S. to Cut Tariffs on Indian-Cut Diamonds and Gems, Implementation May Lag

A US–India joint statement issued in early February says the United States will remove the reciprocal tariff on goods listed in Annex III of Executive Order 14346, a move that would make cut‑and‑polished natural diamonds and many loose gemstones duty‑free once an interim trade agreement is concluded. GJEPC’s Feb. 7 circular put it plainly: “If and when the benefits of Annex III are implemented, cut and polished diamonds are expected to become fully duty‑free.”

Annex III, described in the executive order as the “Potential Tariff Adjustments for Aligned Partners,” was created under Executive Order 14346 dated Sept. 5, 2025. Rapaport reported the joint statement’s language that, “Subject to the successful conclusion of the interim agreement, [the US] will remove the reciprocal tariff on a wide range of goods identified…in the Annex to Executive Order 14346,” and that gems and diamonds are among the product groups named.

Trade pain is fresh for India’s exporters. Moneycontrol reported India’s gem and jewellery exports to the United States fell 44.42 percent year‑on‑year to US$3.86 billion for April–December 2025, down from US$6.95 billion a year earlier, and that December 2025 shipments to the US declined 50.44 percent year‑on‑year. Moneycontrol also notes the US accounts for roughly 30 percent of India’s industry sales and that India processes over 90 percent of the world’s cut and polished diamonds by volume.

Current tariff levels in early February reflected the reciprocal measures added last year: JCK and Jewellerynet reported a 25 percent tariff on loose cut‑and‑polished natural diamonds, a 25 percent duty on lab‑grown diamonds, and a 31 percent levy on finished jewellery that combines a 25 percent reciprocal tariff with a longstanding 6 percent Most Favoured Nation duty. GJEPC emphasized that the 6 percent MFN does not apply to unset diamonds or gems.

Industry and government briefings indicate the post‑interim structure will be uneven. GJEPC and JCK say loose natural diamonds and certain gemstones in Annex III would be duty‑free, lab‑grown diamonds would face an 18 percent reciprocal tariff without the 6 percent MFN, and finished jewellery would carry a combined 24 percent rate (18 percent reciprocal plus 6 percent MFN). National Jeweler published a conflicting figure that groups finished diamond jewellery, colored gemstone jewellery, cultured pearls, and lab‑grown diamonds at 18 percent; that discrepancy remains unresolved in public reports.

Timing is uncertain. Jewellerynet noted no implementation date was specified in the joint statement; JCK cautioned the changes “may not take effect for another month,” while Moneycontrol reported both sides expect to sign the interim agreement by mid‑March and that an executive order could come earlier. President Trump’s social‑media announcement that he and Indian Prime Minister Narendra Modi had “reached a deal” preceded the joint statement and reporting of the tariff adjustments.

Practical checklist for buyers and exporters: confirm whether an item is loose cut‑and‑polished or finished set jewellery, confirm natural versus lab‑grown status, check whether a piece is a US‑origin casting that may remain duty exempt under substantial transformation rules, and use the provisional duty guide — 0 percent for Annex III loose naturals, 18 percent for lab‑grown, and 24 percent for finished jewellery per GJEPC — until customs publishes definitive tariff schedule. Given published contradictions on finished jewellery and pearls, verify rates with GJEPC and official USTR or US Customs notices once the interim agreement text is released.

Quick shareable nugget: India processes over 90 percent of the world’s cut and polished diamonds by volume, yet its US exports slid 44.42 percent to US$3.86 billion in April–December 2025. Have you sold similar pieces to US buyers recently? Tell us what you got.