Diamonds Ain’t Forever Under Trump's Tariffs

Divyaben Makwana had not read about new tariffs on diamonds, gems and jewellery imposed by the United States. Nor had she heard about them on television. What she knew was the loss of her son, 22-year-old Kewalbhai, who died by suicide on June 14. Kewalbhai was under tremendous mental stress due to the loss of his employment as a diamond artisan.

At her modest home in Ranghavdhoot Society, a few kilometres from Katargam, Surat’s bustling diamond hub, Divyaben sat in silence. The old, four-storey building bore fading walls and no lift. Inside her two-room dwelling, a wooden cot took one side of the hall. A shrine decorated with plastic garlands stood nearby. In one corner, colourful festival goods lay unsold. On the wall with peeled pink paint hung Kewalbhai’s solitary photo, staring down from the wall, as if in witness.

She recalled the evening of June 11 when her son consumed poison. Rushed to hospital by her and his younger brother Karmdeep, he died three days later. She had borrowed Rs four lakh for his treatment.

Kewal had worked in a diamond cutting and polishing unit but had been unemployed for four months. He earned between Rs 400 and 600 a day, depending on the work available. Since March, the jobs had dried up, leaving him anxious and under stress.

“He sometimes got work, often was sent back empty-handed. He was also burdened with a loan taken for his sister’s wedding and household expenses,” said Divyaben, and added, “‘I try so hard, but I don’t get any work. When I go to the market, they send me home; they say there aren’t any diamonds, so no work. What should I do, Mummy? I get anxious.’ That’s what he would tell me. I tried hard to encourage and console him, but he was completely broken within,” she said, recalling her son’s desperate pleading.

With a few deep breaths, she continued: “From the age of eighteen, he started going to work in the diamond market. His father is unable to work because of prolonged illness.”

Her younger son, Karmdeep, is eighteen. He dropped out after grade 11 and attends the nearby ‘Eagle Classes’ to learn diamond faceting while looking for a job in the diamond market at the same time. Alongside classes, he currently sells festival goods used for prayers and rituals.

“We are facing extreme economic hardship now. There isn’t enough earning for repaying debts and managing household expenses; our house rent is five months overdue,” said Divyaben.

Twenty-five years ago, Divyaben Makwana and her family migrated from Bhavnagar district in Saurashtra, Gujarat and settled in Surat. She has no permanent house or piece of agricultural land.

A large number of people migrate to Surat from the Saurashtra region of Gujarat, especially from Junagadh, Bhavnagar and Amreli districts and take up jobs in the diamond industry. These workers go to their native places only once a year. The distance from Junagadh to Surat is roughly 360 kilometres, and a round trip costs about Rs 2,000 per head.

As a result of volatility in the diamond industry and economic crises, deaths by suicide due to lack of work are not just Kewalbhai Makwana’s story.

More than 80 diamond cutting and polishing workers have died by suicide in the last year and nearly half that number were from Surat, Diamond Workers Union vice-president Bhavesh Tank said.

Shivang Joshi of the enterprise, Shiv Gems, corroborated Tank’s claim about suicides. “Such news about workers’ deaths is being carried from time to time in local newspapers and on news channels… Every week at least one or two incidents reach our ears,” he said.

However, according to multiple diamond industry workers and traders, there is no intervention by local governance on the issue of suicides, in terms of identifying patterns or providing emergency support through helplines or other means.

Jagdishbhai Khunt, president of the Surat Diamond Association, confirmed the suicides by members of the region’s diamond industry workforce, but he has a different take. “The reasons behind suicides of workers are varied. Sometimes workers end their lives because of stress in their personal lives. Many don’t leave suicide notes behind. Whatever the numbers may be, our association received a complaint of only one such case two months ago, which I will put forth in our bimonthly meeting in August,” said Khunt. He also said that although the industry has slowed due to the tariff increase by the US, the situation is not as bad as the media portrays. With time, the state of this industry will return to normalcy, Khunt added.

Although faceting diamonds for export began in Surat in 1910 and gathered pace in the 1950s–60s, international trade in gems and jewellery had flourished here even before the fifteenth century. Surat is geographically located on the west Indian coast with a port highly favourable for exports.

Trade historian Ashin Das Gupta has written in detail about the region’s centuries-long history in his book Indian Merchants and the Decline of Surat, A.D. 1700–1750. Mediaeval history records that Chhatrapati Shivaji Maharaj raided Surat twice, in 1664 and 1670, looting gems, jewellery and currency to strengthen his treasury. Today, the city provides employment to 1.5 million diamond workers engaged in cutting and polishing.

Traders who import raw material into India and sell it for processing are another group of stakeholders in this business, number roughly one lakh, according to diamond trader Suresh Vohra. He has been trading in the precious gems for forty years. Brokers who connect two merchants form another group of stakeholders who have been impacted by the current tariff hike by US President Donald Trump’s administration.

There are seven to eight lakh workers in Surat who manufacture diamond-faceting machinery such as polishing wheels, magnifying glasses and weighing scales, and do other ancillary work, while 15 lakh workers are directly engaged in diamond faceting, a job which needs a high level of skill, according to trade sources.

Several diamond traders, as well as union leader Bhavesh Tank, said that beyond the increased tariff there are other factors affecting the industry.

But what is evident is that the imposition of a 25 per cent tariff on gems exported from India has slowed the market down considerably. A lingering sense of joblessness and uncertainty is evident in the eyes of workers and traders.

On February 13, 2025, Trump announced a ‘Fair and Reciprocal Plan on Trade’ to levy duties on imports similar to the taxes other countries impose on US goods. Under it, from August 7, he raised the tariff on gems, diamonds and jewellery exported from India to the US to 25 per cent. Earlier it was about 10–11 per cent, an increase of fifteen percentage points. He also indicated that after August 27, this may be raised from 25 per cent to as high as 50 per cent.

Tariff Trouble

According to traders, nine out of ten diamonds exported to America are from India, specifically from Surat. According to the US International Trade Commission, in 2024, India exported $11.58 billion worth of gems and jewellery to the US, while total bilateral trade in gems was $16.89 billion. From India, exports of cut and polished diamonds to the US amounted to $5,601.24 million in FY 2023-24; in 2022-23 this figure was $7,972.16 million. Lab-grown (artificial) diamonds are also exported: in FY 2023-24 exports were valued at $831.45 million, compared to $1,088.65 million in 2022–23.

Despite large exports, with the tariff increase, American buyers now pay 25 per cent more, and Trump’s warning that the tariff may rise to 50 per cent after August 27, would make Indian goods costlier, pushing traders to raise selling prices. When buyers resist, the demand-supply chain is disrupted, and American traders press Indian merchants to lower prices to protect profits. As a result, Indian diamond prices fall and US demand drops, leading to reduced production and layoffs.

About 90 per cent of diamonds are exported to the US, five-six per cent to Canada, Hong Kong, Israel and UAE, while domestic demand remains negligible.

Dinesh Navadia, president of the Indian Diamond Institute in Surat, said: “The current situation will change; India also has the option of developing markets in other countries.” But developing markets abroad is not easy.

“Any business takes time to find customers and establish itself in a new city or marketplace. Diamonds are a luxury item, so it will certainly take a few years to build markets in other countries,” Joshi said, adding that the current slump may not hit big merchants, but smaller companies like his, are already feeling the shock from the tariff hike.

A merchant, who started his modest diamond workshop a few years ago with the help of a loan, says the sharp fall in demand due to tariffs has left units like theirs struggling to survive. “Every day I worry about how to pay the salaries of workers... If this continues, my unit too will shut down in a few months,” he says.

Geopolitics

Though the diamond industry is currently beset by tariffs, there are other reasons for the long-term slowdown. After the Russia-Ukraine war began in 2022, the trade here was affected, traders said. To pressure Russia, the G7 countries imposed restrictions on unprocessed diamonds exported from Russia to India. As a result, the inflow of high-quality natural diamonds from Russia stopped, and India had to procure raw material from Belgium and other countries, which disrupted the demand-supply chain and hit India’s diamond industry.

“We have nothing to do with the Russia-Ukraine war, yet we have to bear its consequences in our business,” said Biren Sanghvi, a trader in Surat’s diamond market.

Diamond workers’ union leader Bhavesh Tank holds that the Israel-Palestine war has also struck India’s diamond trade.

“Most ratnakalakars (diamond workers) in Surat wouldn’t even be able to point out Israel, Palestine, or Russia and Ukraine on a world map. Yet these workers’ lives have been ruined,” said Tank.

Lab-grown artificial diamonds have also contributed to workers’ woes. These diamonds are produced with lower input costs and are cheaper than mined diamonds. This has affected both the prices and sales of natural diamonds and, inevitably, the availability of work and jobs for the workers who cut, polish and facet them.

Precarious Working Conditions

Sandeep Dabi, who works at a small cutting-polishing unit in Varachha, said: “We have to work at least twelve hours a day. Only two days off in a month. There’s no leave for festivals like Diwali—in fact, we have to work for long hours during festivals, but there is no compensation for overtime. I earn Rs 17,000–18,000 a month.”

These workers get none of the social security benefits—no annual bonus, provident fund, gratuity, ESIC or retirement fund. Sick leave and maternity leave are out of the question here. These small units also have poor ventilation. Workers have to climb up and down extremely narrow iron staircases. Employers don’t pay attention to occupational health issues, according to members of the workforce.

In 2022, the Centre for Labour Research and Action based in Ahmedabad published a study on diamond workers titled Uncut Diamonds: Making the Diamonds Shine Brighter. Among Surat workers who responded to this research, 64 per cent reported eye strain after a few years of cutting-polishing work. Ninety-seven per cent said they received no help for occupational health hazards and no safety training of any kind. Fifty-one per cent said that once they enter the factory, they cannot step out until the shift ends.

“Workers have to pay Rs 200 as professional tax monthly, but in return they get nothing. On the contrary, the government makes policies favourable for industrialists,” Tank pointed out. However, the Goods and Services Tax (GST) on diamonds is significantly lower, profiting the merchants. Unprocessed diamonds attract 0.25 per cent GST; cut and polished diamonds 1.5 per cent; and finished jewellery three per cent. However, people who produce or provide essentials have to pay GST from five to 18 per cent.

“The diamond merchants’ lobby supports the BJP government, forcing it to make favourable decisions for them. After all, the rich wear diamond necklaces and labourers wear phansi ka phanda (hangman’s noose),” Tank said.

Priyanka Tupe is Assistant Editor, Outlook. She is based in Mumbai

This September 1, 2025, issue 'The Tariff Weapon’ of Outlook Magazine arrives at a critical moment in India’s economic story. With President Donald Trump announcing that tariffs on Indian exports to the United States will rise to 50 per cent. It appeared in print as 'Diamond Ain't Forever'