The $82 billion diamond trade has reached a standstill due to US President Donald Trump’s tariffs and the global trade war. In addition, shipments through the Antwerp gem trading center have dropped to about one-seventh of the usual level, according to the Financial Times.
Trump’s large-scale tariffs include a 10 percent duty on diamond imports and proposed variable “reciprocal” duties depending on the country of origin, although many other minerals, such as gold and copper, are not subject to these measures.
The United States is the world’s largest consumer of diamonds, accounting for approximately half of global demand. However, because it does not have its own diamond mines, it is forced to import all its diamonds.
According to Karen Rentmesters, CEO of the Antwerp Diamond Center, one of the world’s most active gem trading centers, Antwerp’s diamond shipments have reached a standstill since Trump announced new global tariffs this month.
She said that the inclusion of diamonds in the US tariffs makes no sense and compared the industry’s turmoil to that caused by the coronavirus pandemic.
Typically, a diamond flies around the world many times before it ends up in the hands of a buyer – between producing countries such as Botswana, trading centers including Dubai, and polishing centers in India. The only part of the supply chain in the United States is the certification process. The world’s largest certification agency is the Gemological Institute of America, based in California and employing 3,200 people.
The normal process of transporting diamonds to and from the United States for certification is under threat. Due to these duties, the institute is expanding its services abroad to eight international offices.
According to analysts, the global trade war is likely to hit the overall demand for diamonds and create major shifts in the supply chain. India, whose huge polishing industry processes more than 90% of the world’s diamonds, could be particularly affected.
Since polished diamonds are considered to “originate” in the country where they were polished, India’s multi-billion dollar diamond export industry will be affected by the proposed US 27% duty on Indian goods – unless the two countries strike a deal to avoid tariffs.