Surat processes roughly eight of every ten polished diamonds sold anywhere in the world, and the six lakh-plus workers who cut and polish them have spent the past two years riding a tariff rollercoaster set almost entirely in Washington. The latest drop came on July 24, 2026, when a temporary 10% US tariff on Indian goods expired and a separate 10% duty took its place the same day, this time citing forced-labour concerns under a different US trade law, according to Dainik Jagran.
From crisis to relief to renewed pressure
The industry’s pain started in August 2025, when Washington imposed steep tariffs that industry associations say pushed India’s gems and jewellery exports to the US down more than 44% between April and December that year, from $6.95 billion to $3.86 billion. Surat alone reportedly lost over a lakh jobs in the months that followed, according to trade reporting cited by The Federal. Relief arrived in February 2026, when the US cut the effective tariff burden on gems and jewellery from around 50% to about 18%, with loose diamonds expected to move to zero duty. Industry leaders in Surat called it a booster dose for exports and employment.
That relief was built on a temporary measure under Section 122 of the US Trade Act, good for 150 days. When it lapsed on July 24, the US did not let tariffs fall away. Instead, it applied a fresh 10% duty under Section 301 of the same trade law, covering India and 16 other countries, while some nations face a steeper 12.5% rate. Cut and polished diamonds, previously duty-free in the base tariff schedule, are now subject to that 10% charge, and gold jewellery, which already carried a 6% basic duty, faces a combined 16% burden.
What it means for Surat’s workforce
Cut diamonds made up 44% of India’s gems and jewellery exports in the last financial year, and Gujarat and Maharashtra together account for 88% of that trade, so a change in US duty structure lands disproportionately on Surat’s diamond units, most of them small, family-run polishing operations that survive on thin margins and quick order turnaround. Every point of added tariff makes Surat’s cut stones less competitive against polishing centres in countries facing lower US duty, and factory owners who had begun rehiring after February’s relief now face the same order-flow uncertainty that cost jobs in 2025. Workers paid by the piece, rather than a fixed wage, are typically the first to feel a slowdown in orders, since fewer stones arriving from exporters means fewer days of paid work at the cutting wheel.
Outlook
Industry bodies are expected to keep pressing New Delhi for a bilateral trade deal that would lower the Section 301 duty, since a negotiated settlement is the only route that would remove the tariff rather than merely defer it again. Until such a deal is reached, Surat’s diamond trade looks likely to keep swinging between short-term US measures, each with its own expiry date and its own scramble to replace it.
Sources: Dainik Jagran, The Federal, DeshGujarat
This report was compiled and written with AI assistance from publicly reported sources, and reviewed for accuracy.