How Trump’s Tariffs Have Affected Gujarat’s Diamond Sector and Rajasthan’s Gems Trade

The US tariffs has severely impacted the diamond industry of Gujarat, leading one of its worst employment crises in recent years. Trump’s tariifs have hit the gems and jewellery industry of the country and nearly 100,000 workers engaged in cutting and polishing diamonds in Saurashtra have lost their jobs since April.

The situation has become much worse in the last 10 days as the tariff was hiked to 25 per cent and then doubled to 50 per cent.

According to a Business Standard report, the layoffs have mainly affected small units in Bhavnagar, Amreli and Junagadh, which depend on job work from larger companies to cut and polish rough diamonds. These units mainly employ workers earning who earn ₹15,000-₹20,000 per month. As per industry representatives, many export orders from US buyers have been cancelled or put on hold, thereby putting production lines idle.  

Currently, India is the world’s largest diamond cutting and polishing hub, with nearly 90 per cent of global diamonds processed in the country. The US and China are the biggest markets for Indian diamonds. 

India exported gems and jewellery worth $10 billion to the US between April 2024 and March 2025 (FY25), led by cut and polished diamonds and diamond-studded jewellery.

Risk for Lab-grown Diamonds

Experts have cautioned that the lab-grown diamond segment is also at risk. Many of the workers displaced from the diamond sector are finding employment in the lab-grown diamond (LGD) sector. The US is the largest market for LGDs, and the 50 per cent tariff could hit this business as well, an Economics Times report noted.

Many of the large exporters have refrained from commenting publicly on job losses to prevent backlash from stakeholders. However, several admit that reduced orders could lead to temporary layoffs, shorter shifts or even further downsizing. Some US buyers are reportedly considering shifting jewellery manufacturing to countries like Vietnam and Thailand, where tariff rates are lower.

The industry has also requested the government to fast-track bilateral trade negotiations with the US to remove the tariff disparity. Additionally, it has also sought higher export incentives, interest subsidies and quicker GST refunds to support cash flow.

Impact Goes beyond Gujarat

The tariff impact has not just hit Gujarat but also the gems and jewellery trade in other states like Rajasthan. The gems and jewellery trade in Jaipur, is also expected to face losses, as earlier reported by Business Standard. The state exported ₹17,675 crore worth of gems and jewellery in FY25, among which around ₹3,154 crore went to the US. Jaipur is known internationally for its coloured gemstones and diamond-studded jewellery. 

Exporters in Rajasthan say US orders have been put on hold and are now exploring untapped markets to offset the drop in American demand. Even though new markets can be of assistance, industry players acknowledge that such diversification will take time and cannot absorb the current losses in the near term.