Botswana’s diamond cutting and polishing industry is bracing for deeper strain after the U.S. government imposed a 15 percent tariff on polished diamond imports from the country, stripping away decades of duty-free access previously granted under AGOA and the Generalized System of Preferences (GSP).
While the tariff was scaled back from an earlier proposal of 37 percent, industry diamantaires say the revised rate still delivers a heavy blow to a sector already grappling with weak global demand and rising competition from lab-grown diamonds.
“There is no breathing room for a 15 percent tariff from the previous 0 percent,” said Siddarthi Gothi, chairperson of the Botswana Diamond Manufacturers Association (BDMA). He added that the industry is already operating on extremely thin margins and will find it nearly impossible to absorb the added costs.
“The tariff costs will be paid by the customers in the USA,” said Gothi, echoing sentiments from De Beers Executive Vice President for Diamond Trading, Paul Rowley. In a recent presentation of the group’s interim 2025 financial results, Rowley described tariffs as a consumption tax that adds no domestic benefit and further dampens consumer purchasing power in the U.S.
The new U.S. tariff, announced in early August, comes amid multiple global headwinds—including a slowdown in Chinese retail sales, declining demand for both rough and polished diamonds, and the rapid rise of lab-grown stones, which now make up roughly 25 percent of the U.S. diamond jewelry market, according to industry estimates. The U.S. is the world’s largest market for diamond jewelry, accounting for nearly half of global demand.
While most of Botswana’s diamonds are exported to India, Belgium and the UAE, the U.S. remains an important high-value market.
India, which polishes about 90 percent of the world’s diamonds, was also hit, facing a 25 percent tariff on all imported goods to the U.S., along with an unspecified penalty for failing to conclude a bilateral trade agreement. According to Gothi, the move has triggered concern among producer countries, including Botswana, that export rough diamonds to India for processing before they are sold, often to the U.S. market.
Although the revised tariff provides some relief compared to the initially proposed 37 percent, Gothi said it still spells trouble for Botswana’s midstream industry. “A killer blow to the industry,” he said, noting that it has already seen significant job losses due to the slow market.
“From 4,000+ employees during 2023 to 2,500 jobs in 2025. We wish and hope that things do not get worse from here,” he added.
Contractions in global demand and persistent price pressure have also forced manufacturers to scale down operations. Gothi said diamond prices have been on a steady decline, with uncertainty around the tariffs further worsening market sentiment.
“Prices were already falling through most of July 2025, as major retailers postponed holiday-season purchases, creating additional pressure on both prices and inventory,” he said.
“The industry has already seen a reduction in the number of operational factories in the last two years. At least 20 cutting factories have either closed temporarily or permanently in the last year. All this amidst the slow diamond markets,” Gothi told The Business Weekly & Review.
While a 15 percent tariff may appear modest on paper, it directly threatens Botswana’s long-standing diamond beneficiation model. The country has spent years nurturing local cutting and polishing to add value before export, and the tariff risks eroding the price competitiveness of locally processed stones in the high-value U.S. market.
“This will certainly be impacted if buyers refuse to pay a 15 percent duty on the diamonds they purchase,” Gothi warned, noting that the new tariffs effectively override the duty-free access previously available under AGOA.
Efforts are underway to push back. The World Diamond Council is lobbying for natural diamonds to be added to the list of tariff-exempt products. However, the U.S. government has signaled a preference for country-level negotiations before considering sector-specific appeals, meaning relief for Botswana may not come soon.
In the meantime, Gothi said Botswana must double down on the fundamentals that have historically attracted investors to the sector.
“It is important for global trade that Botswana maintains its competitive edge in terms of the low-cost labor, employer-friendly labor laws, extremely progressive investor-friendly governance and improved ease of doing business to retain the foreign investors invested in Botswana,” he said.
The industry outlook following the new tariffs remains one of cautious uncertainty. Gothi believes the development will disrupt trade from a supply and demand perspective, at least in the short term, until the U.S. government provides clarity and brings the tariff discussions to a resolution.
