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Tariff Relief on Horizon for India as Trump, Modi Make Deal
President Trump said he has reached a trade deal with India, which, when made official, will bring relief to the country’s diamond industry.
On Tuesday, President Donald Trump posted a statement to Truth Social that he has reached a trade deal with Indian Prime Minister Narendra Modi. The deal, which is not yet official, would decrease the tariff rate on diamond jewelry imported into the U.S. from India to 18 percent from 50 percent, while loose diamonds could be exempt from tariffs entirely.
Washington, D.C.—President Donald Trump announced that he and Indian Prime Minister Narendra Modi have reached a deal that will significantly lower tariffs on Indian goods imported into the United States.
“It was an honor to speak with Prime Minister Modi, of India, this morning … We spoke about many things, including trade, and ending the war with Russia and Ukraine. He agreed to stop buying Russian oil, and to buy much more from the United States and, potentially, Venezuela,” Trump wrote on Truth Social Tuesday afternoon.
“This will help end the war in Ukraine, which is taking place right now, with thousands of people dying each and every week! Out of friendship and respect for Prime Minister Modi and, as per his request, effective immediately, we agreed to a trade deal between the United States and India, whereby the United States will charge a reduced reciprocal tariff, lowering it from 25 percent to 18 percent.”
As of press time, the White House has not made an official statement on the deal but, if implemented as the president described on social media, it would effectively eliminate tariffs on loose rough and polished diamonds and gemstones imported from India while decreasing the tax on diamond and gemstone jewelry to 18 percent.
The tariff rate on Indian goods entering the U.S. has been 50 percent since August—the 25 percent reciprocal tariff rate announced in July plus another 25 percent the president added via executive order in August because India had been “directly or indirectly importing Russian Federation oil.”
However, in September, following lobbying by Jewelers of America in Washington, D.C., diamonds, natural pearls (though not cultured pearls), gemstones, and other goods that cannot be produced in the U.S. were added to “Annex III,” a list of products that will be exempt from tariffs once the country importing them reaches a trade deal with the U.S., as long as the country includes Annex III in its negotiations.
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“It was an honor to speak with Prime Minister Modi, of India, this morning … We spoke about many things, including trade, and ending the war with Russia and Ukraine. He agreed to stop buying Russian oil, and to buy much more from the United States and, potentially, Venezuela,” Trump wrote on Truth Social Tuesday afternoon.
“This will help end the war in Ukraine, which is taking place right now, with thousands of people dying each and every week! Out of friendship and respect for Prime Minister Modi and, as per his request, effective immediately, we agreed to a trade deal between the United States and India, whereby the United States will charge a reduced reciprocal tariff, lowering it from 25 percent to 18 percent.”
As of press time, the White House has not made an official statement on the deal but, if implemented as the president described on social media, it would effectively eliminate tariffs on loose rough and polished diamonds and gemstones imported from India while decreasing the tax on diamond and gemstone jewelry to 18 percent.
The tariff rate on Indian goods entering the U.S. has been 50 percent since August—the 25 percent reciprocal tariff rate announced in July plus another 25 percent the president added via executive order in August because India had been “directly or indirectly importing Russian Federation oil.”
However, in September, following lobbying by Jewelers of America in Washington, D.C., diamonds, natural pearls (though not cultured pearls), gemstones, and other goods that cannot be produced in the U.S. were added to “Annex III,” a list of products that will be exempt from tariffs once the country importing them reaches a trade deal with the U.S., as long as the country includes Annex III in its negotiations.
This means that if Tuesday’s Truth Social announcement becomes official and India negotiates for the exemption of Annex III-listed goods, the tariff rate on loose diamonds imported from India will be eliminated, with the 25 percent punitive oil-purchasing tariff ostensibly eliminated, and loose diamonds exempt from the remaining 18 percent reciprocal tariff.
In a member alert issued Tuesday afternoon, JA said the agreement will bring “significant relief” to diamond importers.
“Jewelers of America has been following the tariff situation closely for all countries supplying the U.S. market with fine jewelry,” JA President and CEO David Bonaparte said.
“Reaching a trade deal with India is critical to provide relief to the diamond and fine jewelry market in the U.S. We are hopeful it will bring immediate relief to diamond importers, who have been paying a 50 percent tariff on goods since last August. With loose diamonds included on the list of potentially exempt goods under Annex III, we expect that they will be exempt once the deal is considered official and going forward.”
JA noted in its alert that it is not clear when the new tariff rate will go into effect and if importers that have been paying the 50 percent tariff will be eligible for any retroactive refunds.
Early Wednesday, India’s Gem & Jewellery Export Promotion Council (GJEPC) released a statement on the proposed deal, which it said will provide “immense relief” to the country’s diamond jewelry manufacturers.
The U.S. is India’s largest export market for gems and jewelry, accounting for 31 percent of total exports in fiscal year 2024-2025.
The country’s high tax on imports from India has put a strain on companies’ working capital, liquidity, and margins, GJEPC said, leading to a 44 percent drop in gem and jewelry exports to the U.S. between April and December 2025, a trend it hopes to see reversed if tariffs are lowered.
GJPEC Chairman Kirit Bhansali said, “The U.S.-India trade deal offers vital relief to India’s gem and jewelry sector amid U.S. tariff pressures … Tariff cuts lower costs for U.S. importers, provide immense relief to diamond jewelry manufacturers, boost competitiveness of Indian diamond jewelry, revive demand, and stabilize operations.”
GJEPC said it remains in contact with the government as it awaits official word on the U.S.-India trade deal.
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