Editor’s Note
This article examines the pressures on the U.S. diamond market, a key global hub, as it contends with a 10% import tariff amid broader luxury sector headwinds. The analysis highlights how trade policy intersects with shifting consumer demand and economic uncertainty.
Diamonds entering the United States are subject to a 10% base import tariff, and the U.S. market accounts for over half of the global demand for polished diamonds.
The uncertainty surrounding tariffs emerges as the entire luxury industry faces a demand slowdown following the post-pandemic boom and challenges from economic downturns.
While diamonds may be composed of the hardest substance on Earth, they are particularly vulnerable to the aggressive tariff agenda of U.S. President Donald Trump due to their complex supply chain and high price tag.
This precious mineral faces a 10% base import tariff to enter the U.S., a market representing over half of global polished diamond demand. The industry also faces additional tariffs if no new agreement is reached after Trump’s 90-day tariff suspension period ends.
These small gems typically cross multiple countries before reaching stores. From mines in Botswana or South Africa, to trading hubs in the Middle East or Europe, then to cutting and polishing centers, and finally back to jewelry manufacturers — a single item often embarks on a long journey before arriving at a store. This complex supply chain means the diamond industry is highly susceptible to any trade disruptions.
Raw materials like gold and copper have been excluded from U.S. tariffs, and the industry is pushing for diamonds to receive a similar exemption.
However, the biggest shock to the industry comes from the rise of lab-grown diamonds (LGDs). These diamonds are chemically identical to natural ones and indistinguishable to the naked eye, yet sell for just 20% of the price of natural diamonds. Consumers are benefiting from lower prices.
The Knot’s 2025 “Real Weddings” study, which gathered feedback from nearly 17,000 couples, showed that over half of U.S. respondents last year said their engagement ring featured a lab-grown diamond.
2021 was a watershed moment when Pandora, the world’s largest jewelry brand by sales volume, led the way by ceasing sales of natural diamonds.
Amid macroeconomic weakness and increased competition from lab-grown diamonds, natural diamond prices have fallen nearly 60% since their peak in March 2022.
However, some analysts say the industry is nearing a stabilization point between lab-grown and natural diamonds.
Facing these challenges, some key players are rethinking strategy.
Diamond industry giant De Beers said it saw signs of a pickup in U.S. demand before Christmas and the outbreak of tariff uncertainty. Instead of investing in the booming lab-grown diamond market, De Beers is doubling down on natural diamonds.
De Beers recently announced it would shut down its lab-grown diamond jewelry brand, Lightbox, to reinforce “its commitment to natural diamonds in jewelry.”
The company said the closure aligns with its strategy outlined last May “to focus on higher-return activities and streamline the business.”
The closure comes as De Beers’ parent company, Anglo American, is divesting the firm and seeking potential buyers.
Against the backdrop of the current luxury slowdown, the jewelry sector, particularly the high jewelry segment, stands out as it serves the wealthiest clientele and is less cyclical.
Earlier this month, Richemont’s jewelry brands division, which includes Cartier, Van Cleef & Arpels, and Buccellati, achieved double-digit growth, driving revenue above expectations.
Analysts point out that the future of the natural diamond industry hinges on brand narrative.
