Surat at standstill, exports halted: How Trump’s tariffs cast a pall over ‘Diamond City’

US President Donald Trump’s tariffs on India are now in effect.

The tariffs, a 25 per cent levy on India plus an additional 25 per cent for trading with Russia, are set to impact a number of sectors particularly textiles and seafood.

The tariffs are now threatening to take the shine out of India’s diamond hub of Surat.

Let’s take a closer look

Surat, the ‘Diamond City’

Surat is widely known as the ‘Diamond City’. Over 90 per cent of the word’s rough diamonds are sent there to be cut and polished.

Surat’s location near the Arabian Sea coast made it an important trading city for India. However, Surat was overtaken Bombay in the 17 and 18th centuries.

The city’s diamond industry took off around six decades ago. Over the years, many people in the industry found their way to Surat. The city burnished its reputation For quality and efficiency in the 1980s and 1990s.

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Today, the city is home to thousands of diamond polishing units. Between 800,000 and a million workers are said to be employed directly in Surat’s diamond industry. Another 500,000 are employed informally.

The Surat Diamond Bourse (SDB), located in the Diamond Research and Mercantile City, with its 7.1 million square feet of space, is said to be larger than the Pentagon.

It was inaugurated by Prime Minister Narendra Modi in December 2023.

“One more diamond has been added to Surat’s magnificence. The tall buildings around the world have lost their sheen in front of such a huge diamond that is now being opened today”, Modi said at the time. Modi praised the SDB as a symbol of “new India’s strength and new resolve”.

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The Prime Minister spoke these words for good reason.

After all, India’s gems and jewellery industry exports are valued at $28 billion – much of it to the United States. Data from the Gems & Jewellery Export Promotion Council (GJEPC) showed that India comprised 68 per cent of the volume and 42 per cent of the value of the US’ total diamond imports last year. India’s diamond exports to the US were valued at $5.79 billion in 2024.

Mahidharpura, Surat’s biggest bazaar, witnesses thousands of people gather every day to trade diamonds six days a week.

However, all has not been well for India’s diamond industry of late.

First, a soft Chinese economy has seen the demand for diamonds slowing. India’s diamond exports were already at a two-decade low earlier this year.

India’s exports of cut and polished diamonds (CPD) to the US have been dropping these past few years. CPD exports declined by nearly half between 2021-2022 to 2024-2025 – from $9.86 billion to $4.81 billion.

Then, in April, Trump dealt a fresh blow.

How Trump’s tariffs are hurting Surat

Since the US president announced his ‘Liberation Day’ tariffs in April, a pall has been cast over the city.

Diamond cutting and polishing factories first began reduced their output. Then, they began cutting down on the number of working hours. Some also ventured into lab grown diamonds.

Finally, they began laying off staff. At least 50,000 workers have been fired since April. Another 100,000 jobs at risk. Over a dozen workers have taken their own lives since Trump’s tariff announcement.

Bhavesh Tank, vice-president of the Diamond Workers’ Union, told The Telegraph dozens of diamond polishers have committed suicide in the past year and a half due to financial struggles.

At this time of year, workers in Surat typically ramp up production to meet a surge in orders from the United States ahead of Christmas and New Year. This year, however, many artisans are uncertain whether they will even have work.

“Demand has slumped so badly that the diamond packets I sold for Rs 25,000 last year now barely fetch Rs 18,000,” said Shailesh Mangukiya, who runs a cutting and polishing unit in the city.

Mangukiya said he had halved his staff strength to 125.

Today, the town has been brought to a near standstill. Export orders have been halted. People in the city are in disbelief. Jagdish Prajapati, 49, a worker who has been polishing diamonds for two decades, said the situation could soon become dire.

“We have already been grappling with an economic slowdown over the past few years, with problems stemming from the Russia-Ukraine war. The burden of steep US tariffs, especially on Indian diamond, gem, and jewellery exports, has created more fear,” Prajapati told DW.

“Many workshops are already cutting back hours and halting new hiring. If the tariffs come, it will leave families struggling to make ends meet.”

As per Washington Post, Ajay Lakum is among those laid off. Lakum, a sorter, has been working in diamonds his entire life. He said his father too worked in diamonds. while he was paid only modest wages, it helped him support his household of nearly a dozen people and helped pay part of his mother’s cancer treatments. People like Lakum are “direct casualties” of Trump’s “escalating trade war”, as per the newspaper.

Dinesh Tank of Gujarat’s Junagadh, who barely earns Rs 18,000 a month as a diamond polisher to feed his family of five, told The Telegraph that he hopes Trump changes his mind.

Tank, 44, used to employ 20 diamond workers a year ago.

“I had to shut shop because of the impact of the Russia-Ukraine war on the diamond industry. We were not getting orders. There was no way I could continue to support the 20 workers. I took up the job myself,” he told the newspaper.

Hitesh Patel, director of Surat-based Dharmanandan Diamonds, told Indian Express that diamond exports to the US had declined 25 per cent over the past few years and factory output had dropped between 30 and 35 per cent. “With the imposition of new tariffs, exports will crash further”, Patel said.

“The diamond industry players involved in exports are keeping an eye on August 27, when the 50 per cent tariff will be effected. If nothing happens, we will negotiate with buyers in the US and request them to bear some part. When the industry is facing such tough times, the relationship between buyer and seller is put to the test”.

‘Will completely destroy our industry’

“The US tariffs will completely destroy our industry,” Ramesh Zilriya, president of the Gujarat Diamond Workers Union told The Washington Post. Zilriya called on the US government “not to impose something that would ruin so many lives”.

Stung by tariffs, US buyers are likely to source diamonds from countries such as Israel, Belgium and Botswana, industry officials said.

Kirit Bhansali, chairman of the Gems & Jewellery Export Promotion Council (GJEPC), told The Telegraph that Turkey, Vietnam, Thailand and Dubai faced lower US tariffs of 15 to 20 per cent – putting Indian diamonds at a disadvantage.

Shaunak Parikh, vice-chairman of the GJEPC, said another 150,000 to 200,000 workers could lose their jobs If India and the US did not come to an agreement.

India’s diamond exporters are trying to boost sales to Asia, Europe and the West Asia to offset US losses, but finding new diamond buyers is no easy task.

As Vijay Mangukiya, chairman, Dhani Jewels, told Indian Express, “There is no other country which can replace the consumption capacity of US in the entire world. There are other countries to whom we export, but they are no match to the US”.

The industry is cutting rough diamond purchases and operating with minimal inventories to preserve cash flow, while cash-strapped smaller units have begun offering deep discounts to stay afloat, exporters said.

The SDB too stands eerily quiet, with only a few traders at work.

At the Surat Diamond Bourse, more than 4,700 offices have been sold, but less than 250 are in use with several companies rethinking their plans to move in, a bourse official said on condition of anonymity.

The owner of a Mumbai-based diamond firm, who bought space at the bourse last year, said he had shelved relocation plans.

“US tariffs have already shaken our business, and we don’t want the added hassle of moving from Mumbai to Surat,” he added.

Lalji Patel, a diamantaire and social activist, told The Telegraph this is a crisis the likes of which has never been seen.

“The slowdown in the diamond industry has also plunged the Surat Diamond Bourse (SDB) into a crisis,” Patel, vice-chairman of the SDB, told the outlet.

It remains to be seen what India can do to get Trump to change his mind. For now, things look bleak for Surat’s diamond industry.

With inputs from agencies