US Tariffs: The Diamond Exemption
May 08, 25
Donald Trump hit the pause button on reciprocal sanctions, but he didn't press stop.
The diamond industry has been at a virtual standstill since his shock "Liberation Day" proclamation on 2 April, which was followed a week later by a 90-day suspension.
But the clock is still ticking down to 9 July when US importers will start paying tariffs of 26 per cent on goods from India, and a sliding scale of tariffs on imports from its other trading partners.
Unless the Trump administration backs down.
The World Diamond Council (WDC), representing De Beers, Tiffany & Co, Signet, Chow Tai Fook and anyone who's anyone in the natural diamond industry, this week called on the US government to exempt natural diamonds.
The diamond industry has been at a virtual standstill since his shock "Liberation Day" proclamation on 2 April, which was followed a week later by a 90-day suspension.
But the clock is still ticking down to 9 July when US importers will start paying tariffs of 26 per cent on goods from India, and a sliding scale of tariffs on imports from its other trading partners.
Unless the Trump administration backs down.
The World Diamond Council (WDC), representing De Beers, Tiffany & Co, Signet, Chow Tai Fook and anyone who's anyone in the natural diamond industry, this week called on the US government to exempt natural diamonds.
In a statement on Monday it "respectfully urged" the US administration to "consider granting a targeted exemption for natural diamonds".
Diamonds are a special case, the WDC says, because the US doesn't produce any.
Imposing tariffs wouldn't protect US diamond miners from foreign competition, as it might do with many other goods.
There aren't any US diamond miners to protect. Tariffs would only harm the industry, jeopardise jobs and hike the cost to consumers.
"Tariffs on natural diamonds would function as a consumption tax," Feriel Zerouki, WDC president, told IDEX Online on Wednesday, a couple of days after going public with the statement.
"The US does not produce natural diamonds, but it is the largest consumer market in the world.
"We are already seeing polished prices rise, likely a reflection of concerns about future supply.
"This is not about special treatment, this is about recognizing the unique structure of a global industry with no domestic production and ensuring policies support American businesses and consumers."
The same case could, technically, be made for rubies, emeralds and sapphires.
But they're a minority market (85 per cent of gemstones sold in the US are diamonds) and the US does produce its own, albeit in small quantities.
You could also make a similar claim for platinum group metals, rare earth elements, bauxite (for aluminum), a few exotic spices (vanilla, saffron, or cardamom) and arguably bananas and pineapples (the US produces some, but is nowhere near self-sufficient).
But the truth is that there is only one major industry that can seriously claim this exemption - non-producer, huge consumer - and that's diamonds.
"We have seen a great deal of industry support from across the gamut of the natural diamond supply chain," Zerouki tells us. "We have also received private messages from numerous US businesses asking how they can support our position.
"In the immediate future we will be working with our members in the US who need our support asking the US government for an exemption from tariffs.
"Very importantly, however, we are also firmly focused on the need for reciprocal exemptions from other countries.
"So, we are working with our international members to support them in seeking that reciprocity."
The WDC makes a compelling argument, at least as far as those within the diamond world are concerned, but is it strong enough to convince Trump?
He's nothing if not unpredictable, but there is some cause for optimism.
He has issued multiple exemptions since his original announcement - for smartphones, laptops, other electronic goods, semiconductors, industrial and pharmaceutical products - so exempting diamonds would not set a precedent.
Sixty-two days and counting until the reciprocal tariffs are re-introduced. Watch this space.
Have a fabulous weekend.