Most jewelers are deeply concerned that the high tariffs US President Donald Trump has applied to diamonds imported into the country from India will drag down holiday sales, a Rapaport survey found.
Some 89% of respondents told Rapaport News they expected sales to be worse than last year following the imposition of 50% levies that went into effect on August 27. India, which cuts and polishes 90% of the world’s rough, received an initial tax of 25%, compounded by a 25% penalty for sourcing oil from Russia. Surprisingly, 11% of those surveyed believed sales would be better than the previous year.
Many jewelers were seeking alternative methods to keep business afloat during the season without spending too much money. The largest portion, 44%, expected to change their sourcing to US dealers and wholesalers, while 22% said they had enough stock to take them through the holidays. A further 22% intended to keep ordering from India but planned to raise the prices of their goods accordingly. Meanwhile, 11% stated they had preordered excess stock to protect against such an occurrence.
Nearly half of respondents maintained they would compensate by carrying fewer diamonds and more of other products that were not as highly taxed and originated from other countries, including gemstones and pure gold. However, 67% stressed they would not replace their normal supply of natural diamonds with lab-grown to fill the gaps.
Approximately 25% of jewelers surveyed ultimately planned to shift manufacturing from India to lower-tariff locations. One third decided that the China-Hong Kong region would be their best bet for manufacturing, currently at a tax rate of 30%, while 17% picked Turkey, with 15% levies, and another 17% chose Mexico, carrying tariffs of 25%.
Regarding memo, respondents were split on how it was affecting business. Some 38% said they were taking fewer goods by this method, with 37% claiming to be carrying more on memo. The remainder saw no change to this part of their business.
Whether tariffs will affect sales beyond the holiday period remains to be seen. Last week, a US federal appeals court ruled the taxes were unlawful, giving Trump until October 14 to appeal to the Supreme Court.
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