After Trump’s tariff announcement, India’s jewellery exports to US likely to be worst hit: Here’s why

The Trump administration’s tariff hike would be a significant burden on Indian exporters and American consumers alike. “While the tariff’s application to competing nations presents both challenges and opportunities, it is likely to significantly impact India’s diamond and jewellery sector—a cornerstone of its exports to the US. In the long term, we foresee a reshaping global supply chains. In short run, we anticipate challenges in sustaining India’s current export volume to the US market,” the Gem & Jewellery Export Promotion Council (GJEPC) said.

“The Indian government should work in this direction and look at lowering tariffs on US goods exported to India. As the tariffs announced are retaliatory in nature, they will be matched with the existing rates. India currently imposes a 20 per cent import duty on gold, silver, and platinum jewellery from the US,” said Colin Shah, MD, Kama Jewellery.

He said efforts should be made to rationalise import duty as well as balance trade with all major nations. Import duties help protect local industries, but the retaliatory tariffs will end up negating this step by most governments.

“It would be critical to understand impact on key commodities like oil and gold in an uncertain economic environment which could fuel domestic inflation,” said Vineet Agrawal, co-founder at online investment platform Jiraaf. “Safe-haven buying was evident as concerns grew over potential economic slowdown if major tariff changes were implemented by the US on other nations. Given the uncertainty, gold is expected to remain highly volatile over the next two days as participants closely monitor tariff announcements and their broader economic implications,” said Jateen Trivedi, research analyst – commodity and currency, LKP Securities.

Gold prices rise as uncertainty increases

The tariff hike has come at a time when gold, considered as a safe haven asset during uncertain times, rose further to touch the $3,200-mark per ounce in the international market. In India, gold price has crossed the Rs 91,000-mark per 10 gm.

Spot gold prices settled slightly lower at $3,125 per ounce. “This rally underscores investors’ flight to safety amid growing fears of a full-blown trade war. With expectations of a weakening US dollar — driven by trade imbalances and retaliatory actions from trade partners — central banks are likely to continue increasing their gold reserves, further supporting elevated prices,” said Mahendra Patil, founder and managing partner, MP Financial Advisory Services LLP.

While tariffs are inflationary for the US, any slowdown in exports due to retaliation could widen the trade deficit. Slower growth may compel the Federal Reserve to cut rates, adding further pressure on the dollar, he said.