The risk of stagflation—a dangerous mix of slow growth and rising prices—is quietly rising, and India’s $24 billion diamond industry is the latest red flag. The reason? U.S. tariffs.
Last year, the U.S. bought nearly 30% of India’s gem and jewelry exports, half of which were polished diamonds from Surat. ‘
Now, with a 10% tariff already in place and a 27% hike looming, Surat’s famed diamond streets are losing their shine. President Trump’s trade war isn’t just making headlines—it’s cutting into India’s bottom line.
What does this mean for the average worker?
It’s simple. Fewer exports mean fewer orders. That means layoffs. And in a city like Surat—where four out of five diamonds in the world are cut and polished—this is not just an economic issue. It’s an existential one. Many families here have done this work for generations. If exports tank, livelihoods vanish.
A cup of chai in Surat might still seal a diamond deal, but these days it comes with a side of anxiety.
Also Read IndusInd Bank Q4 Update: Shares Rebound Despite Major Loss, Should You Buy, Sell, or Hold?
A Glittering Industry Now on Edge
Walk through Surat’s diamond market, and you’ll see a surreal mix of tradition and high-tech. Business is done with paper notes, but the cutting rooms boast lasers and computer-aided designs. The workers? Often barefoot, always focused.
But it’s not just Trump causing trouble. Lab-grown diamonds are flooding the market. They’re cheaper, easier to make, and worry-free when it comes to global sanctions. And then there’s the EU and G7’s ban on Russian stones—yet another hit to supply and pricing.
“We’ve taken a 10% hit already. If Trump adds 27%, we’re out,” says Jigar Patel from Ahmedabad’s Jewellers Association.
From Tea Stalls to Trade Talks
Deals worth thousands happen on parked scooters, but the stakes are now global. India doesn’t mine diamonds—it imports rough stones from Australia, Africa, and beyond. These stones pass through dozens of hands and countries before they end up on a finger in New York.
With no major mines of its own, the U.S. still controls much of the diamond certification market. If Washington turns the screws, Surat’s sparkle could dim permanently.
Why This Signals Stagflation Risk
Let’s be clear: high tariffs don’t just raise prices for U.S. buyers. They choke trade, kill jobs, and stall industries—without lowering inflation. That’s stagflation. India’s diamond story could be just the start. If more sectors fall into the same trap, recovery won’t just be slow—it’ll be painful.
And here’s the kicker: all this damage, just to win a trade deal? That’s not negotiation. That’s playing poker with a hammer.
Also Read IRCON International Shares Fall 2% as Q4 Profit Drops 14% Compared to Last Year
