U.S. job prospects remain unaffected by De Beers CEO's stance on Donald Trump's diamond tariffs.
Rewritten Article:
The honcho of the globe's biggest diamond corporation, De Beers, is bullish about the possible scrapping of tariffs on diamonds they consider a "no-gain" for the US.
Al Cook, De Beers' CEO, chatted with the Financial Times, hinting at discussions with various governments regarding this matter.
Cook stated that tariffs are of "no gain" to the US and would be merely a tax on American consumers, not creating jobs. The US is the world's biggest market for diamond jewelry, yet lacks domestic mining or known diamond deposits.
The recent tariffs, announced by President Donald Trump, have caused a ruckus in the diamond industry and temporarily halted trade, according to market participants.
The World Diamond Council, an industry lobby group, warned today that $117 billion in annual revenues, along with 200,000 American jobs in the jewelry sector, could be at risk if tariffs on diamonds aren't lifted.
"Tariffs on diamonds would function as a consumption tax, increasing prices on engagement rings, anniversary gifts, and other jewelry," the council stated on Monday, urging the White House for an exemption of diamonds from the new import duties.
Diamonds imported into the US are subject to a 10% tariff on all imported goods, along with a variable levy per country, currently suspended for 90 days.
Many raw materials were omitted from the tariffs, but diamonds were not – adding to the woes of an industry grappling with a slump in demand and competition from lab-grown diamonds, cheaper alternatives.
Being small and valuable, diamonds traverse a complex global supply chain, traveling from mines in places like Botswana or Angola, to polishing centers in India, to jewelry stores in China or the US. This makes them highly vulnerable to trade disruptions.
The bleak market conditions and tariff disruptions come at a sensitive time for De Beers as they prepare for a spin-off from their parent company, Anglo American. This separation could occur through a sale or an initial public offering.
Anglo American is reportedly planning to launch the sale process for De Beers "very soon." At the same time, De Beers is also preparing for an IPO set to take place by early next year.
De Beers reported a 44% decrease in first-quarter revenue compared to the same period last year due to lower prices and sales volumes. Anglo American twice reduced De Beers' value in the previous two years, taking an impairment charge of $2.9 billion and $1.6 billion, respectively, on the diamond unit.
Cook admitted tariffs had an impact but insisted it wasn't as drastic as anticipated. "People are confident enough that, in the long term, diamonds will be exempted from tariffs," he said. "The US has been pretty clear that resources not produced within the U.S. aren't the targets for tariffs."
Cook's remarks follow signs of the White House's leniency on tariffs by granting exemptions for items like smartphones and auto components. Moreover, positive noises from trade talks between the US and India – the world's largest diamond polisher – hint at a reprieve.
A trade deal between New Delhi and Washington could ease one of the major bottlenecks in the diamond supply chain, considering India polishes over 90% of the world's diamonds and is a significant exporter to the US.
- The CEO of the world's largest diamond corporation, De Beers, believes that scrapping tariffs on diamonds would be purely beneficial for the economy, as they consider diamonds a "no-gain" for the US.
- Al Cook, the head of De Beers, implied in a conversation with the Financial Times that discussions with various governments are occurring regarding the potential removal of tariffs on diamonds.
- Cook stated that tariffs on diamonds are simply a consumption tax, increasing prices on jewelry, and are not creating jobs, as the US is the world's biggest market for diamond jewelry, yet lacks domestic mining or known diamond deposits.
- The World Diamond Council warned that $117 billion in annual revenues, along with 200,000 American jobs in the jewelry sector, could be impaired if tariffs on diamonds aren't lifted.
- Tariffs on diamonds, subject to a 10% tariff on all imported goods and a variable levy per country, have added to the woes of an industry already struggling with a slump in demand and competition from lab-grown diamonds, which are cheaper alternatives.
