Trump’s sudden tariff hike stuns Surat and Mumbai’s diamond, textile hubs

The sudden announcement by US President Donald Trump to impose a 25 per cent tariff on Indian imports has triggered alarm across India’s diamond, gems and jewellery, and textile sectors, particularly in the manufacturing hubs of Surat and Mumbai.

The abrupt imposition of the tariff has thrown existing orders into uncertainty, leaving many industry stakeholders anxious about their execution and financial viability.

Jewellery orders in limbo

“We were not expecting the tariff to be imposed so suddenly. The announcement has left previous orders and trade commitments in a state of uncertainty,” said Amit Korat, President of the Surat Jewellery Manufacturers Association.

Also read | India’s diamond industry in despair as exports hit two-decade low

“As a result, any further production will have to be halted. At the moment, most traders are in the process of manufacturing orders placed during the JCK exhibition in Las Vegas in June this year. The traders will suffer immense losses if those orders are halted and not processed under the old tariff regime,” he added.

Diamond traders in Surat are bracing for a deeper crisis in an industry that has already been reeling from a prolonged recession. The sector has faced a drop in demand from China, disruptions caused by the Russia-Ukraine war, and increased competition from lab-grown diamonds.

Unease in lab-grown diamond sector

Lab-grown diamond exporters are also sounding the alarm. The US accounts for about 30 per cent of India’s gems and jewellery exports, with lab-grown stones making up nearly half of that share.

“The high tariff will not just impact the natural diamond segment but also lab-grown diamonds, which are now subjected to a 29 per cent duty. Moreover, a majority of the diamonds cut and polished in Surat are exported to the US. We apprehend that with the new tariff, our exports to the US will take a major hit. The global recession and the ongoing Russia-Ukraine war had already weakened the diamond market. This new tariff puts us in an even tougher spot,” said Dinesh Navadiya, Regional Chairman of the Gem and Jewellery Export Promotion Council (GJEPC) and president of Southern Gujarat Chamber of Commerce and Industry (SGCCI).

Babu Vaghani, president of the Lab Grown Diamond Association (LGDA), Surat, said, “The profit margin in the lab-grown diamond sector is too slim to absorb a hike of this scale. With average profits at around 2 per cent, there’s no room to accommodate the new tariff. Unless traders raise prices significantly, they won’t be able to recover their costs. But consumers are unlikely to accept such a price jump.”

Small traders to bear the brunt

The industry has already been grappling with the fallout of the Ukraine conflict and instability in the Middle East. Trump’s tariff announcement has further intensified the crisis.

According to GJEPC data, gross exports of gems and jewellery stood at Rs 2.17 lakh crore between April 2024 and February 2025, a drop from Rs 2.46 lakh crore during the same period in 2023-24.

“While the entire industry will be affected, the new tariffs will be especially damaging for small and medium traders. We estimate that around one lakh jobs could be lost. The last time a 10 per cent tariff was imposed, around 50,000 workers were impacted,” said Rajesh Rokde, Chairman of the All India Gem and Jewellery Domestic Council.

Fresh blow to textile sector

Meanwhile, the textile sector in Surat, already in crisis since 2017, is preparing for further setbacks as the new tariffs take effect.

“India’s textile and garment industry, which directly and indirectly employs over 4.5 crore people, is under immense stress due to both international and domestic policy shifts. The recent tariff hike by the Trump administration is an added blow,” said Champalal Bothra, Chairman of the Federation of Textile Traders Association (FOSTTA).

Also read | Trump tariff on Bangladesh hands Surat textiles a giant opportunity

“This move places Indian traders at a disadvantage compared to exporters from China, Vietnam and Bangladesh. Roughly 35 per cent of Surat’s textile exports go to the US, and under the new tariff regime, taxes on those exports will rise by 12 to 13 per cent,” he explained.

“In this scenario, only small and medium traders backed by robust subsidies or incentive schemes from the Indian government will survive. We plan to formally demand that the existing incentive schemes be strengthened in response to the increased tariff, so Indian exporters can remain competitive against Bangladesh, Vietnam and China,” Bothra added.