With US President Donald Trump’s tariffs taking force on Wednesday, rating agency Crisil expects it to have a steep impact on the diamond polishers.
According to its press release on Thursday, the 50% tariff hike will cut the revenues of the sector by 28% to 30% in this financial year.
The revenue in this fiscal is likely to fall to $12.5 billion, in comparison to the $16 billion posted in the last financial year. This is based on the rating agency’s analysis of 43 diamond polishers that account for nearly a fourth of the industry’s revenues.
“The blow will follow a 40% degrowth over the past three fiscals because of a fall in both prices and sales volume of natural diamonds as demand in the US and China dropped, and competition from lab-grown diamonds rose,” Crisil said in its report.
The tariffs will make export to US difficult as the industry’s low margins make the absorption of the incremental levy difficult and because the declining demand would lead to passing the incremental burden to the consumers. Crisil expects the reduced operating leverage to erode the operating margin of diamond polishers by nearly 50-100 basis points and add pressure to their credit profilers.
