What Tariffs Have Done to the Jewelry Industry (And What You Can Do About Them)

On April 2, 2025, US President Donald Trump signed an executive order invoking the International Emergency Economic Powers Act (IEEPA) to impose tariffs on just about every country in the world. After almost a year of chaos and confusion, the Supreme Court ruled that Trump’s use of the IEEPA was not legal, but that was not the end of tariffs. The Trump Administration then proceeded to impose tariffs under an existing law, the Trade Act of 1974.

The section of this law most relevant to the jewelry industry is Section 301, particularly as it pertains to tariffs imposed on countries deemed to have excess capacity or unfair trade policies or that the administration believes is using forced labor. These new tariffs have affected a number of countries that are vital to the jewelry industry supply chain. These are countries that mine gemstones and precious metals, cut and polish gemstones, and produce finished pieces of jewelry.

In September, the CIBJO Congress hosted a panel discussion on the effect of geopolitics on the jewelry industry. Even with everything else going on in the world, from Ukraine to Iran, the main topic of conversation and cause for consternation was the effect of tariffs on the industry and how to best navigate this new tariff regime. Here’s our analysis of what the experts on the panel had to say.

Diamonds and Color Gemstones

Straight-Line Tariffs, Spaghetti Supply Chains

Implemented chaotically, with rates determined and altered without clear directives, American tariffs have thrown the jewelry industry into chaos and were met with broad opposition by industry associations. The US government failed to account for the interconnected nature of the modern global supply chain when implementing these tariffs

Nowhere is that more apparent than in the diamond trade. The diamond supply chain is not “one straight line” from a mine to Dubai to a manufacturer to a retailer, said Karen Rentmeesters, CEO of the Antwerp World Diamond Center. “It’s one giant spaghetti.”

The tangled nature of not just the diamond supply chain but the jewelry industry supply chain as a whole means that the traditional concepts of “country of origin” and imports and exports that govern tariffs don’t make sense for jewelry. To someone with no knowledge of the jewelry industry, it seems like high tariffs on gemstones would help the American mining industry. But, as AGTA CEO John Ford explained, sapphires mined in Montana are processed in Thailand or India, and “because of substantial transformation, they’re subject to the import tariffs even though they are a product of the United States.”

American-mined gemstones have to be exported for processing and then re-imported because no large-scale cutting industry exists in this country; there is no domestic industry for tariffs to ostensibly protect. Because the rough gemstones undergo “substantial transformation” in another country, they are considered, for the purpose of import tariffs, the product of the country in which they were transformed from a rough to a cut and polished product.

Effects of Tariffs on the Diamond and Color Gemstone Market

As is the case with other industries, these tariffs have not strengthened American manufacturing. The United States does not have the infrastructure, expertise, or investment to create a gemstone polishing and cutting industry. Additionally, gemstones are not geologically present in the US in sufficient quantities to replace imported gemstones.

As a result of these tariffs and the confusion surrounding their implementation, products have become more expensive to produce as businesses at all levels of the supply chain scramble to pay the tariffs or find alternative suppliers. These costs, as in every industry, are ultimately passed on to the consumer.

Low consumer spending and consumer confidence have begun to affect luxury consumers, long insulated from economic ups and downs. That doesn’t mean they aren’t buying anymore; it just means their luxury dollar doesn’t go as far as it used to. Paradoxically, color gemstone sales are up this year despite tariffs. During the CIBJO panel discussion, AGTA President Bruce Bridges remarked that AGTA had “probably the busiest Tucson in recent memory.”

When asked about the effect of tariffs on color gemstones sales, Bridges answered, “The appetite for gemstones in the United States right now is extremely high” and that “tariffs haven’t curbed the appetite [for color gemstones] in the United States,” but he declined to speculate as to why.

The most likely answer is that strength in the color gemstone industry is likely driven by turmoil in the diamond industry. Consumer confusion over the difference between mined and lab-grown diamonds, and the relative benefits of each, is one aspect of that turmoil. Another is the reduction in production that is affecting the industry. While on the surface it looks like tariffs have not affected the color gemstone industry, what’s actually happening is that other geopolitical and market forces may be bolstering color gemstone sales.

What Your Business Can Do About Tariffs

Support Trade Association Lobbying

The most important lesson of the CIBJO panel discussion is the necessity of trade association lobbying. During the Q&A session that followed the discussion, one exasperated representative from Zambia asked the panel where to even start the tariff exemption conversation with US government officials.

Rentmeesters answered that “there is no magic formula” beyond “relentlessly making your case based on rational arguments” to all levels of the US government and connecting with other trade organizations.

Raluca Anghel, Head of External Affairs and Industry, Natural Diamond Council, recommended teaming up not only with other jewelry industry organizations but also with other industries in your country so that you’re not negotiating in isolation.

We agree with these suggestions. Tariffs ultimately act as consumption taxes; all the costs these tariffs impose on businesses are ultimately borne by the consumer in the form of higher prices. Our recommendation is to align with industry advocacy groups such as AGTA, WDC, and JA to present unified, data-driven arguments for zero-tariff policies. Only when government representatives hear the same argument over and over from a number of different industry groups will they see the need for tariff exemptions for the nations vital to the jewelry industry supply chain.

Diversify Sourcing Channels

A diverse supply chain is your best defense against geopolitical and economic uncertainty and instability. Build flexibility into raw material sourcing so that you don’t have to rely on single processing hubs. Having a number of suppliers in different countries will help absorb localized tariff shifts. This will also help you maintain pricing and margin stability amid rising costs and changing tariffs.

We’ve seen one crisis after another shock the jewelry supply chain since the 2020 pandemic. A diversified supply chain isn’t just important for this most recent crisis. It will help your business remain resilient against whatever is to come in the future.

Building for the Future

Even if the next administration reverses the current administration’s tariffs, the relationships you build with other trade organizations and the knowledge you gain from negotiating with the US government will prepare you for whatever comes next. Throughout the decade, we’ve seen both the threats and the opportunities that unexpected crises reveal. The measures that sustain your business through one crisis can help you be prepared for the next.