Dear Friends,
We are rapidly approaching the most important season of the year for natural diamonds, the holiday season. Although I remain optimistic about the long-term future of our industry, we are facing complex challenges in the short-term. We need to address these issues and make changes where necessary, even if this is uncomfortable or difficult.
We are still grappling with the US import tariffs and how they affect our industry. So much is still uncertain. India has been hit with a 50 percent tariff rate, but recent press announcements say that the U.S. has promised to reduce these tariffs. Total exemption from tariffs on diamonds is being considered by the US administration on a country-by-country basis, and in September the EU won a significant victory for the AWDC when polished diamonds originating in Europe were declared tariff-free. I am hopeful that this is just the first step and that tariff-free status for polished diamonds will be extended to all the other diamond centers – including India, Israel, Dubai and the African producing countries.
Due to the tariffs, many US traders have been buying only diamonds already in the United States. All the major polishing centers have been affected by the tariffs and are looking for ways to mitigate their impact.The Indian industry is particularly well organized and has been working to reduce production, explore new markets like the Gulf and Europe, and push for government support like easier credit and relaxed export rules.
On the supply side, De Beers is keeping rough prices steady due to lower demand and uncertainty due to its sale. This is having a moderating effect on the market.
The U.S. consumer market is projecting significant growth this holiday season. The National Retail Federation expects retail sales to rise to over $1 trillion dollars. The Federal Reserve is expected to lower interest rates which should encourage consumer luxury purchases. The jewelry market is expected to grow, and retailers may absorb some of the price jumps due to market competition and consumer demand.
Looking ahead, the industry faces an uncertain short-term future. Market confidence in natural diamonds is fragile, due to shifting consumer preferences for transparency and environmentally friendly choices. As we have said so many times before, we must invest in innovative marketing and consumer education. The Luanda Accord signed by the major producing countries in Africa to provide a percentage of their diamond revenue to the Natural Diamond Council for these purposes is a step in the right direction. The WFDB is now working with other industry organizations to raise funds in other creative ways to support marketing. This is clearly an industry imperative.
Additionally, we should consider working to have the label Lab Grown changed to synthetic, which has already been adopted in France. Lab Grown is a positively charged but inaccurate term that does not reflect the procedure used to create these stones which are actually manufactured in a factory. Changing the name to synthetic would help greatly in repositioning these stones as a cheap imitation of the original.
I wish you good fortune in your professional and private pursuits.
Sincerely,
Yoram Dvash
President
World Federation of Diamond Bourses
