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The Sparkle Dims: Diamond Industry Faces Tariff Turbulence

Diamonds may be eternal, but their demand is not immune to global economic shifts and policy changes. A new 10% baseline import tariff on polished diamonds entering the U.S.—a market responsible for over 50% of global demand—is putting significant pressure on the industry. And that’s just the beginning.

If the U.S. fails to renegotiate trade terms at the end of its current 90-day pause, additional tariffs could follow, further straining an already fragile sector.

“It’s very clear that the diamond industry, globally, is facing a perfect storm,” said Karen Rentmeesters, CEO of the Antwerp World Diamond Centre, which represents over 1,400 businesses in the world’s largest diamond trading hub.

A Supply Chain Built on Precision, Now at Risk

Diamonds aren’t mined and sold locally—they traverse a complex and delicate global supply chain. From the mines of Botswana and South Africa, to trading hubs like Antwerp and Dubai, to cutting centers in India and China, diamonds can pass through 5–6 countries before reaching a consumer.

This global journey makes the industry especially sensitive to trade disputes. Even minor disruptions in customs processes or sudden policy shifts can delay entire shipments, stall inventories, and increase costs at each stage.

Curiously, other commodities like gold, platinum, and copper have been exempted from recent tariffs. Industry leaders argue that loose diamonds should also qualify as raw materials, since they’re rarely bought in their unmounted state.

“Nobody walks around with a polished diamond in their pocket. It’s part of a finished product—jewelry,” Rentmeesters said.

Luxury Market Cooldown Compounds the Crisis

Even without the tariffs, the luxury sector is facing headwinds. The post-pandemic boom has cooled off, particularly as consumer demand in China—one of the fastest-growing luxury markets—contracts due to economic concerns. According to Bain & Co., China’s luxury market saw flat growth in 2024 after an 18% rise the previous year.

Jewelry remains one of the few strongholds, especially high-end pieces targeted at ultra-wealthy buyers. However, the mid-tier market, which relies heavily on imported natural diamonds, is slowing.

Lab-Grown Diamonds: The Industry Disruptor

Adding more pressure is the rapid ascent of lab-grown diamonds (LGDs). Chemically and visually identical to mined diamonds, LGDs now sell for up to 80% less. The price drop has revolutionized consumer behavior, particularly among younger buyers.

A recent 2025 Real Weddings Study by The Knot, surveying nearly 17,000 U.S. couples, found that over half of engagement rings now feature lab-grown stones.

Pandora, the world’s largest jewelry brand by volume, stopped selling mined diamonds in 2021. CEO Alexander Lacik explained the decision:

“Eighteen months ago, lab-grown loose stones outsold mined diamonds in the U.S. That trend hasn’t reversed. Instead, it’s accelerating.”

The affordability of LGDs is inviting new consumers into the market. A 3–5 carat lab diamond can now be purchased for under $5,000, compared to $50,000–$100,000 for a mined equivalent.

Price Crash and Stabilization on the Horizon?

Natural diamond prices have dropped nearly 60% since peaking in March 2022, according to data from diamond analyst Paul Zimnisky. However, Zimnisky believes a market equilibrium may be in sight.

“We’re reaching a tipping point where consumers are starting to understand the difference between lab and mined. The story behind the diamond—its rarity and origin—matters.”

Still, he cautions that messaging and transparency will be crucial. Consumers need assurance they’re paying a premium for authenticity.

De Beers Bets Big on Natural Diamonds

Despite the rising tide of LGDs, De Beers—the world’s best-known diamond company—is abandoning its own lab-grown brand. It recently announced the closure of Lightbox Jewelry, its LGD venture launched in 2018.

“The declining resale and emotional value of lab-grown jewelry only widens the gap between synthetic and natural diamonds,” said Al Cook, CEO of De Beers, in a May 2025 company statement.

De Beers’ move coincides with parent company Anglo American’s efforts to divest the diamond giant, which is currently seeking buyers.

A Glimmer of Hope: Jewelry’s Enduring Allure

Not all signs point to gloom. Richemont, parent company of Cartier and Van Cleef & Arpels, reported double-digit growth in jewelry sales earlier this month—beating analyst expectations.

High-end jewelry, which appeals to wealthier consumers less affected by inflation or economic dips, continues to thrive.

What’s Next? Industry Needs to Rebuild Trust

Analysts agree that for mined diamonds to maintain their position, the industry must focus on education, certification, and emotional branding. People don’t just buy diamonds—they buy stories, legacy, and assurance.

“Diamonds are emotional purchases, not practical ones,” said Zimnisky. “The industry must help buyers understand why natural still matters.”

Final Thoughts

As the U.S. implements new tariffs and lab-grown diamonds reshape consumer preferences, the natural diamond industry is at a crossroads. Whether it can polish its image and reclaim market share may depend less on sparkle—and more on strategy.