Diamond Crisis: 85% Export Crash Signals Trouble for Your Engagement Ring

The diamond trade, long a symbol of luxury and enduring value, is facing an unprecedented crisis. At the heart of this turmoil lies Antwerp, Belgium, the global epicenter of diamond trading, where exports have plummeted by a staggering 85% due to sweeping U.S. tariffs. These levies, introduced in early 2025, have sent shockwaves through an industry already grappling with declining demand, competition from lab-grown gems, and geopolitical disruptions. The United States, which accounts for half of global diamond consumption, relies entirely on imports, making it particularly vulnerable to these trade barriers. This article delves into the causes and consequences of the tariff-driven collapse, explores the broader implications for the $82 billion diamond market, and examines potential paths forward for an industry teetering on the edge.

The Tariff Shock: Disrupting a Global Supply Chain

In April 2025, the U.S. implemented a 10% tariff on diamond imports from most countries, with higher duties targeting specific nations: 27% on India, 20% on the European Union, and 34% on China. These measures, part of a broader trade policy under the Trump administration, aim to address trade imbalances but have had a devastating impact on the diamond sector. Antwerp, which handles roughly 80% of the world’s rough diamonds and 50% of polished stones, has seen shipments drop to one-seventh of normal levels, a decline described as catastrophic by industry leaders.

India, the world’s largest diamond polishing hub, processes over 90% of global diamonds and exports $24 billion annually, with 30% destined for the U.S. The 27% tariff on Indian goods has forced exporters to pause operations, as the cost increase threatens profitability. In Bhavnagar, Gujarat, a key diamond processing region, merchants report a three-year recession exacerbated by these new duties, with fears that millions of livelihoods are at risk. The European Union, home to Antwerp’s trading hub, faces a 20% tariff, further complicating the flow of polished diamonds to the U.S.

The U.S. tariff regime also includes nuanced rules based on the World Trade Organization’s “substantial transformation” principle. For instance, a rough diamond mined in Canada but polished in India is classified as Indian, incurring a 27% duty. Conversely, Canadian rough diamonds polished in Canada qualify for a 0% tariff under the US-Mexico-Canada Agreement (USMCA). These complexities have created confusion and disrupted certification processes, as U.S. laboratories like the Gemological Institute of America (GIA) struggle to adapt.

A Perfect Storm: Preexisting Challenges Amplified

The diamond industry was already under strain before the tariffs hit. Global demand has weakened due to economic uncertainty, with 2023 seeing a 25% drop in Antwerp’s trade value to $23.7 billion, following a 20% decline in 2022. The rise of lab-grown diamonds, which cost 70-80% less than natural stones, has eroded market share, particularly among younger consumers prioritizing affordability and sustainability. In 2024, lab-grown diamonds accounted for 20% of U.S. retail sales, up from 5% in 2018.

Geopolitical factors have compounded these woes. The European Union’s 2023 ban on Russian diamonds, which once comprised 35% of Antwerp’s imports, disrupted supply chains. While the Antwerp World Diamond Centre (AWDC) supports the sanctions, the loss of Russian supply has shifted trade to hubs like Dubai, which now surpasses Antwerp in trading volume due to fewer regulations and a business-friendly environment. Emerging competitors, including India and African nations like Botswana, are also capturing market share as Antwerp’s dominance wanes.

The pandemic’s lingering effects have further dampened consumer appetite for luxury goods. De Beers, a leading diamond producer, reported a $4.5 billion write-down in value over 2022-2024, reflecting weak market conditions. Retailers like Signet Jewelers, the world’s largest diamond jewelry seller, have refused to absorb tariff-related costs, pushing the burden onto suppliers and threatening smaller businesses.

Economic Ripple Effects: From Antwerp to Bhavnagar

The tariff-induced standstill has far-reaching consequences. In Antwerp, the diamond sector employs 6,500 people directly and supports 30,000 jobs indirectly, contributing $15 billion to Belgium’s economy. The 85% export drop threatens these livelihoods and could weaken Antwerp’s position as a global hub. Karen Rentmeesters, AWDC’s CEO, likened the disruption to the pandemic’s impact, warning that “everything has literally stopped.”

In India, the gem and jewelry sector employs 5 million workers and accounts for 7% of national exports. The U.S. tariffs, combined with a domestic recession, have halted operations in Bhavnagar, where 80% of businesses report reduced activity. Ghanshyam Patel, President of the Bhavnagar Diamond Association, noted that the jump from 0% to 26% tariffs on polished diamonds and 6% to 32% on jewelry has made U.S. exports unviable. The Gem & Jewellery Export Promotion Council (GJEPC) is engaging with Indian authorities to seek relief, but uncertainty persists.

Globally, the diamond market faces a potential contraction. The $82 billion industry, which spans mining, polishing, trading, and retail, relies on seamless international trade. Tariffs disrupt this chain, increasing costs for consumers and reducing demand. Pandora, a major jewelry retailer, estimates a $155 million annual hit from tariffs, with $90 million in 2025 alone, prompting price hikes and supply chain restructuring. Analysts predict a 10-15% decline in global diamond demand by 2026 if tariffs persist.

Consumer Impact: A Dimming Diamond Dream

The U.S., as the world’s largest diamond market, drives global trends. With 50% of global consumption, American buyers—particularly for engagement rings—set the tone for the industry. However, tariffs are raising prices at a time when inflation is already squeezing budgets. A 1-carat natural diamond, priced at $5,000 on average, could see a 10-27% increase depending on its origin, pushing consumers toward lab-grown alternatives or forgoing purchases altogether.

This shift is evident in consumer behavior. 

A 2024 survey by the Diamond Producers Association found that 60% of U.S. consumers under 35 prefer lab-grown diamonds for ethical and cost reasons. 

The tariff hike could accelerate this trend, further eroding demand for natural stones. Luxury brands like Tiffany & Co. and Cartier, which rely on high-end natural diamonds, may face margin pressures as they balance price increases with brand positioning.

Industry Responses: Adaptation or Collapse?

The diamond industry is scrambling to adapt. In Antwerp, the AWDC has launched a tariff information portal to guide traders through the complex U.S. regulations. The organization is also advocating for exemptions, citing the minimal U.S. production of diamonds and the industry’s globalized nature. Meanwhile, GIA has expanded services in Dubai and Hong Kong to bypass U.S. tariff-related logistical issues, allowing non-U.S. clients to submit diamonds for certification without incurring duties.

In India, manufacturers are exploring new markets, such as China and the Middle East, though these regions lack the U.S.’s purchasing power. Some are investing in lab-grown diamond production to diversify revenue streams. De Beers is engaging stakeholders to assess tariff impacts and exploring direct-to-consumer models to offset retail losses.

However, these measures may not suffice. The industry’s fragmented nature—spanning miners, cutters, traders, and retailers—complicates coordinated action. Smaller players, particularly in India and Belgium, lack the resources to absorb tariff costs or pivot quickly. Without government intervention or tariff relief, bankruptcies and consolidation loom large.

The Geopolitical Dimension: Trade Wars and Market Shifts

The diamond crisis is a microcosm of broader trade tensions. The U.S.-China trade war, with tariffs on Chinese goods reaching 145%, has spilled over into other sectors, including diamonds. China’s retaliatory 125% tariffs on U.S. goods further complicate global trade flows. While diamonds are a small fraction of bilateral trade, their high value and symbolic importance amplify their visibility.

The EU’s decision to exempt U.S. polished diamonds from retaliatory tariffs has provided some relief for Antwerp, preserving $3.9 billion in annual trade. However, this move underscores the industry’s vulnerability to political decisions. As trade wars escalate, diamonds risk becoming collateral damage in negotiations over steel, semiconductors, or automobiles.

Emerging hubs like Dubai and Botswana are capitalizing on these disruptions. Dubai’s diamond trade grew 15% in 2024, driven by relaxed regulations and proximity to African mines. Botswana, which produces 20% of global rough diamonds, is investing in cutting and polishing facilities to capture more value domestically. These shifts threaten Antwerp’s historical dominance and highlight the need for structural reforms.

A Path Forward: Innovation and Resilience

To survive, the diamond industry must innovate. Sustainability and transparency are critical, as consumers increasingly demand ethically sourced gems. Technologies like blockchain for origin tracking could differentiate natural diamonds from lab-grown alternatives. Antwerp could leverage its reputation for compliance and ethics to attract premium buyers, while investing in marketing to revive the “diamond dream.”

Governments have a role to play. Belgium could streamline customs and banking regulations to support Antwerp’s traders, while India might offer tax incentives to offset tariff losses. Internationally, the G7 could harmonize sanctions on Russian diamonds to prevent market distortions, ensuring that hubs like Dubai do not undermine ethical standards.

Finally, the industry must address its marketing deficit. In 2024, diamond marketing spending was less than Apple’s annual budget for a single product line. A unified campaign, akin to De Beers’ iconic “A Diamond Is Forever,” could reignite consumer interest, particularly among Millennials and Gen Z.

The diamond industry stands at a crossroads. U.S. tariffs have exposed its vulnerabilities, from reliance on American demand to inefficiencies in global supply chains. Antwerp’s 85% export drop is a warning sign, but it also presents an opportunity for reinvention. By embracing innovation, diversifying markets, and advocating for fair trade policies, the industry can navigate this crisis and reclaim its luster. For now, the sparkle of diamonds is dimmed, but with resilience and strategic action, this timeless gem may yet shine again.