Diamond Consumers to Bear Brunt of US Tariff on Indian Goods

Ankur Daga, CEO at Angara, talks about how tariffs on India are weighing on the jewelry industry. Plus, how might the surprise import tariff on gold affect the sector as well?

A Trump administration ruling that gold bars will be subject to tariffs stunned traders who had assumed they would be exempted, throwing bullion markets into turmoil.

Futures in New York, which are backed by bars shipped from Switzerland and other key trading and refining hubs, surged to a record.

Traders, analysts and executives across the industry had understood the bars would be exempt from reciprocal tariffs enacted by President Donald Trump, such as a 39% levy on Swiss goods. But when a gold refiner in Switzerland asked about it, US Customs and Border Protection clarified that one-kilogram and 100-ounce gold bars are subject to the levies, according to a letter from the agency.

The decision, if it remains in place, has sweeping implications for the flow of bullion around the world, and potentially for the smooth functioning of the US futures contract. Gold’s role as a financial asset and global currency sets it apart from other commodities like copper that have been roiled by tariffs, and traders said on Friday that shipments were freezing up in response to the shock news.

“In the long run, the existence of US tariffs on deliverable gold products raises the question on the role of futures trading in the US,” said Joni Teves, a strategist at UBS AG. “Until there is clarity, we expect the gold market and precious metals markets more generally to remain very nervous.”

The US Customs notice was first reported by the Financial Times.

The decision extends a tumultuous year for gold, which has soared to unprecedented levels amid strong buying from central banks and as Trump’s trade war drives haven demand. Earlier this year, physical flows were upended as traders rushed billions of dollars worth of gold and silver into the US as New York prices traded at large premiums in anticipation of potential tariffs. However, that trade came to a crashing halt after the US included gold and silver in its list of exemptions from the tariffs announced in early April.

Indian exporters who built their businesses on Americans’ demand for affordable goods are redrawing their strategies and weighing alternatives to reduce the pain from US President Donald Trump’s shock 50% levy on imports.

Trump’s decision to double tariffs in the space of a week will make India-made apparels to generic drugs prohibitively expensive and can heavily disrupt exports, if not bring them to a grinding halt for many smaller businesses.

“This is worse than Covid for us,” said Lalit Thukral, founder of apparel exporter Twenty Second Miles, who fears the industry will have to sell his goods at a loss and comparing the tariff-led disruption to the coronavirus pandemic. “At least, there seemed to

Calls for Support

Indian trade bodies across affected industries, including apparel, gems and jewelry, and shrimps, are ramping up calls of support from the Modi government

The Confederation of Indian Textile Industry wants the government to “fast track” measures to limit the hardship faced by local apparel exporters while an industry body for shrimp exporters is seeking export incentive programs.

The Gems and Jewellery Export Promotion Council wants duty drawbacks, pre-shipment loans and deferring interest on working capital facilities, Chairman Kirit Bhansali said in a statement

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