Five Possible Ways Tariffs Will Affect the Industry

By Rob Bates | April 24, 2025

The industry is starting to feel the impact of the 10% tariffs imposed by the Trump administration earlier this month, with wholesalers already sending out letters to retailers saying they’ll have to raise prices.

The tariffs are a very unpredictable situation, so it’s tough to make long-term (or even short-term) predictions about their impact. But here are five possibilities that could play out, according to people in the industry I spoke with.

Secondhand dealers might have an opportunity.

We’ve already seen sellers of used watches and “pre-owned” fashion hoping for boosts in business. That could help the jewelry industry as well, since a decent amount of its products are made with materials that could be considered secondhand.

Despite the record-high gold price, we don’t seem to be seeing anything close to the mid-2010s “gold rush,” when companies like Cash4Gold advertised during the Super Bowl. Yet as gold continues to climb—and we face a possibly slowing economy—I wouldn’t be surprised if more consumers want to trade in their gold.

It may also be a good time for retailers to start buying diamonds off the street, though they should always have proper equipment to check if the diamond is lab-grown.

If retailers step up their buying of secondhand goods, that business might become more competitive, and consumers could get more money for their items. That may help natural gems and diamonds, says analyst Paul Zimnisky, as it will reinforce their image as a “store of value,” much like the secondhand market seemed to boost the watch business.

Tariffs could boost U.S. manufacturers.

The main goal of Trump’s tariff policy, according to the administration, is increasing U.S. manufacturing. Companies such as Rembrandt Charms have sent out messages reminding jewelers their products are made in the U.S.

So yes, U.S. manufacturers should be helped. Let me add a few provisos, though. Even if a piece of jewelry is produced in America, in many cases its components come from abroad. Not only does the United States not have diamond mines, but Customs judges a diamond’s origin based on where it’s cut.

While the U.S. once had a vibrant cutting industry, it’s unlikely that will return. (For one, the tariffs apply to rough, negating any cost savings.) According to one recent article, some Indian cutters earn pennies per stone. I don’t expect any U.S company to get anywhere near that, even with a 10% tariff—or the proposed (now suspended) 27% “reciprocal” levy on India.

That is also why U.S. synthetic diamond growers—and I know of at least two still operating—may not benefit from the tariffs, at least not as much as some expect. If those companies grow diamonds here but cut them in India, China, or elsewhere, not only will they have to pay tariffs when their goods are re-exported to the United States, they could face extra levies if they’re sent to China.

Another proviso is that if U.S. companies sell their products overseas, they could face reciprocal tariffs from countries like Canada, which has implemented a 25% levy on U.S. jewelry. Again, a lot depends on how Canada defines where the piece is manufactured, but the new tariff would present a paperwork burden, if nothing else.

Canada and Mexico might do well, at least temporarily.

For now, most items from Canada and Mexico have been spared U.S. tariffs, due to the U.S.-Mexico-Canada Agreement. That’s good for diamonds cut in Canada—and some are still polished there—as well as for companies with factories in Mexico. While it’s possible that advantage may go away at some point, if the Trump administration reaches deals with countries like India, for now our two neighbors have a clear leg up.

Large players will probably weather this better than smaller ones.

Signet has already told its vendors that it won’t pay for tariffs on existing orders; we hear some vendors are balking, but if history is any guide, they’ll eventually swallow the extra cost. It’s possible that may change if the tariffs continue; certainly, it doesn’t help a company if all its vendors—who already work on tight margins—end up going bankrupt. Yet one advantage of being a big company is getting to squeeze your suppliers.

According to Matt Stoller of the American Economic Liberties Project, large grocery chains like Albertson’s are sending messages similar to Signet’s to their vendors. And while suppliers might not be able to buck the majors, they have more leverage with smaller players:

This dynamic creates something called the “waterbed effect,” where suppliers will keep prices low for the big guys and raise them on smaller stores. It also works in the opposite direction, where retailers will force smaller suppliers to give them price concessions while allowing bigger suppliers to hike prices.

This is why some analysts think large merchants like Walmart—while clearly not thrilled with what’s going on—may end up on top. They have the scale and ability to rearrange their supply chain.

There could be an opportunity for lab-grown.

Let’s say the tariffs raise lab-grown diamond jewelry prices 10%. That just brings them to where they were a few months ago. Any price increase would be felt more on natural diamonds. If inflation rises as much as some think, it may be harder for bridal buyers to resist lab-grown. (And even the rich may start watching their wallets, given the declines in the stock market.)

Remember, this is all very fluid. There are already signs that the administration is changing its strategy. No one truly expects America to sign dozens of trade deals in 90 days. My guess is that Trump will secure a few broad-brush trade agreements, declare victory, then spend the next few years hashing out the details. But those details matter. As we saw with De Beers’ contract with Botswana, working them out can take a while.

When Trump’s rhetoric on tariffs was at its most bellicose, some said, “Relax, this is just a negotiating tactic.” And that may be true. But it’s generally when people react—such as when stocks fell due to Trump’s comments about firing Federal Reserve chair Jerome Powell—that the administration backs down. It’s quite likely this all may be over by the summer, though no one should count on that. Only the administration knows the true endgame here, and sometimes I’m not even sure they do.

Which brings me to my final bit of advice. As former White House official Monica Gorman told me, make your voice heard. Call your congressperson and senators. Let them know how the trade war is affecting your business, whether it’s positive or negative.

These tariffs are something Washington is doing to your business. As businesspeople, you have an obligation to let Washington know what that means to you.

(Photo: Getty Images)