The United States has replaced its temporary Section 122 surcharge with a Section 301 tariff regime, retaining a 10% additional duty on Indian gem and jewellery exports from July 24.
The tariff applies to natural diamonds, lab-grown diamonds, coloured gemstones and jewellery. Unlike the earlier Section 122 surcharge, the new Section 301 tariff has no automatic expiry.
New tariff regime
The move follows the conclusion of the U.S. Trade Representative’s (USTR) Section 301 investigations into 60 economies over the implementation and enforcement of prohibitions on imports produced with forced labour.
US President Donald Trump signed a Presidential Memorandum on July 23, bringing the new tariff structure into effect from 12:01 a.m. EDT on July 24.
Impact on Indian exporters
For India’s gem and jewellery sector, the immediate tariff burden remains unchanged at 10%.
However, the legal basis has shifted to Section 301 of the Trade Act, under which the tariff has no statutory expiry and can be modified or withdrawn only by the U.S. Trade Representative.
Competitive position
India secured placement in the lower 10% tariff band after adopting a prohibition on forced labour imports after June 5, 2026.
This gives Indian exporters a 2.5 percentage-point tariff advantage over competitors such as China, Hong Kong, Thailand, Türkiye, the UAE, Israel and Vietnam, which face a 12.5% Section 301 tariff.
Higher duty on jewellery
Despite the relative advantage, Indian exporters continue to face challenges.
Cut and polished natural diamonds, coloured gemstones and semi-precious stones, which earlier entered the US duty-free under Most Favoured Nation (MFN) rates, will now attract the additional 10% tariff.
10% on Lab grown diamonds
Lab-grown diamonds and synthetic stones will also attract a 10% tariff.
Jewellery exports will continue to face the existing US MFN duty of 5.5-6%, in addition to the new 10% tariff, taking the effective import duty to about 15.5-16%.
Exemption gap
The Gem & Jewellery Export Promotion Council (GJEPC) said Indian exporters face a competitive disadvantage as natural diamonds, pearls and coloured stones originating from the European Union, including Belgium, Switzerland and certain other economies are exempt from the Section 301 duty.
Consequently, identical polished diamonds from those regions can enter the US without the additional tariff, while Indian-origin diamonds continue to attract the full 10% duty.
Several diamond-producing countries, including Botswana, Namibia, the Democratic Republic of the Congo, Zimbabwe, Sierra Leone, Liberia, Ghana, Tanzania and Mauritius, also remain outside the scope of the Section 301 action.
However, products that undergo substantial transformation in India are treated as Indian-origin goods and will continue to attract the 10% tariff when exported to the US.