“Short-term pain for long-term gain, who knows?” asks Ronnie Vanderlinden, president of the International Diamond Manufacturers Association (IDMA), referring to US President Donald Trump’s assurances that the blanket tariff hikes he revealed on April 2 were necessary to “make America wealthy again.”
“At this point, there’s just a lot of confusion in the diamond and jewelry trade,” the veteran 47th Street diamantaire tells Rapaport Magazine. “It changes everything for the industry — how much we’ll be paying and where. The initial goal must be to defuse the confusion.”
The White House announced an overall 10% tariff on imports from all countries, and higher reciprocal tariffs on several nations — including major exporters of diamonds, gems and jewelry. The latter duties were set to take effect on April 9, but the US administration froze them at the last minute for 90 days, leaving most of those countries subject only to the 10% hike.
While the initial tariff talk had been a peripheral concern for the industry, “suddenly there’s a direct impact,” Vanderlinden explains. “But we don’t know how this will play out.”
Weighing on confidence
Prior to the April announcement, the main concern for the trade was the impact that tariffs would have on consumer sentiment. The Conference Board’s Consumer Confidence Index declined around 11% in the first three months of the year, while the National Retail Federation (NRF) projected that retail sales for 2025 would grow between 2.7% and 3.7% — a slowdown from last year’s 8.1% growth.
“Overall, the economy has shown continued momentum so far in 2025, bolstered by low unemployment and real wage gains,” said NRF president and CEO Matthew Shay in the trade body’s April 2 release. “However, significant policy uncertainty is weighing on consumer and business confidence.”
Meanwhile, independent jewelers maintained last year’s positive sales momentum during 2025’s first quarter. Gross sales among independents grew 4% year on year in March, were flat in February, and rose 8% in January, “despite retailers across the board feeling the pressure,” according to a Facebook post from the Edge Retail Academy.
In contrast, diamond dealers and manufacturers were cautious in the first quarter as trading remained slow. “The midstream suffered far worse than retailers because there were too many goods on the market,” says IDMA board member Jeff Fischer, president of New York-based Fischer Diamonds.
The difference in sentiment between the wholesale and retail segments was evident at the Centurion show in March, says Sean Moore, vice president for luxury sales at retail jeweler Borsheims. There was a positive energy among independents, whereas the vendors “were singing a different tune,” he reports. “You could feel the anxiousness from some of the suppliers.”
Despite relatively positive sales over the holiday season, retail jewelers have refrained from building up inventory so far in 2025. People have been going to the trade shows, and there is some buying, but there is also a lot of “wait and see,” according to Peter Smith, owner of consultancy The Retail Smiths, which specializes in jewelry brands and retailers.
Moore agrees, suggesting that retailers may have delayed their purchases amid geopolitical and global trade uncertainties.
Wealth distinctions
Broadly speaking, independent jewelers were the strongest segment of the market. They outperformed the majors in 2024 and had a historic run for the four years following 2020, Smith notes.
The main drivers of the independents’ business have been higher-end VIP clients, rather than aspirational, newer-money clientele, as the former are very loyal to their local markets, observes Russell Kwiat, chief operating officer of New York-based, family-run diamond-jewelry brand Kwiat. Independents, he elaborates, can provide the experience and storytelling that appeals to the higher-end segment, whereas the non-branded, mid-market stores tend to be more transactional. Kwiat itself supplies approximately 120 retailers.
Identifying a client’s category of wealth can be a struggle when customers are more reserved in their fashion choices. That’s especially true in more conservative areas like Omaha, Nebraska, where Borsheims is located, says Moore. “We spend a lot of time helping people develop their jewelry wardrobe as they grow their wealth, so we don’t necessarily make that distinction [between old and new money]. We specialize in certain brands that fit our core customer, and that drives us a lot more than trying to identify the affordable-luxury consumer.”
Squeezed in the middle
Still, the jewelry retail market has segmented along those lines of wealth distinction in the last year. Jewelry sales at independents grew 4% in 2024, according to the Edge Retail Academy, whereas among the majors, Signet Jewelers saw same-store sales decline 3.4%, and Brilliant Earth reported net sales down 5.4% for the year.
What’s been happening at Signet — with its exposure to declining mall traffic and the drop in its average price — is notably different from what’s happening among independents, with their encouraging growth since 2020, Smith says. He acknowledges that the market dynamic is changing, leading to a bifurcation between price-point selling and experiential retail. “That will continue to squeeze the sector, because the majority of retailers tend to live in that middle space.”
Smith points to data from the Jewelers Board of Trade (JBT) to illustrate the decline of the middle market: In 2024, the number of retail jewelers operating in the US dropped 3.2% to 17,123 businesses. That’s about a 20% decline over the past decade, according to Rapaport records.
It’s not just price point that defines the middle. This segment, which is not very brand-centric, offers a non-differentiated product and experience, Smith explains.
“You can get away with that when people aren’t traveling or going out, as was the case during the pandemic, [when] people turned to jewelry to mark anniversaries and birthdays,” he says. Since customers were limited in their choices anyway, stores had less need to make their product and experience stand out. Now, however, things have changed, and the decreasing number of such stores reflects consumers’ revived desire for memorable retail experiences.
How to stand out
Providing that kind of experience is arguably one of the bigger challenges facing the industry, says Moore.
Borsheims’s approach is to start with a wide selection of beautiful jewelry that demonstrates value, and combine that with excellent service and education about the product so customers can make informed decisions, he explains.
Kwiat points to branding as a powerful tool for showing value. His company has developed a collection of proprietary fancy-shape diamonds and a mine-to-market program centering around the Botswana diamond story. The goal is to “cut to perfection,” rather than worrying about how much rough might be lost, he emphasizes.
Kwiat’s combined focus on quality and expertise in diamond-cutting and jewelry ensures that it can present a diamond “that is second to none,” and its partners can offer a high-end, brand-type diamond with a strong story behind it, states the COO. The connection to Botswana, he adds, was a decision the company made because the impact that diamonds have had in enabling free health care and education “is important to us as a family.” As a result, Kwiat’s natural-diamond business has grown in the last two years despite industry declines.
“For me, [branding natural diamonds] is a line of defense against synthetics while the generic end is being pulled down,” he explains. “A lot of the people who are deciding to go to natural want something a little different.”
Struggles with synthetics
In contrast, middle-market jewelers are suffering from the rise in lab-grown diamond sales, as it’s affecting their goods’ average ticket price, according to Smith. “You can’t sell a product for less than it costs to manufacture. When there are so many people involved in selling the product, it’s sort of a race to the bottom in terms of pricing.”
The jewelry retail business depends heavily on diamonds and diamond jewelry, which account for about 43% of total value, so retailers can’t afford to get the diamond side wrong, he stresses.
The price erosion has been evident in segments where synthetics have gained market share. The average engagement sale at Borsheims has dipped with the increase of synthetics, which now make up some 25% of its bridal business, Moore reports. “Our lab-grown diamond sales are still on the incline, but as prices continue to drop, we are concerned there is a point at which the product is so inexpensive, it’s no longer considered a luxury item.”
Similarly, Brilliant Earth’s sales appear to have plateaued despite a steady rise in transaction volume, and the California-based firm’s average order value has declined. Sales fell 5.4% to $422.2 million in 2024, with the average price down 11% at $2,269 and the total number of orders up 7% at 186,030.
The rise of synthetics has also affected retail inventory management. Jewelers can take a lot of synthetic goods on memo because there’s so much supply, observes Moore, and this is leading to an overall drive to hold more inventory through memo programs. At Signet, the value of consignment goods in inventory grew 13% to $601.5 million in the fiscal year that ended February 1. Memo accounted for 31% of the jeweler’s total stock at year’s end, versus 27% a year earlier.
Stability or tumult?
Other factors have also fed into jewelers’ buying restraint. Record-high gold prices have fueled uncertainty and reduced diamond purchases. Jewelers have cut down on the diamond content of their pieces as they spend more on the gold elements.
Regardless, toward the end of the first quarter, dealers and manufacturers were gaining confidence. Polished prices stabilized as supply increasingly dried up, according to Vanderlinden. The RapNet Diamond Index (RAPI) for 1-carat diamonds slid 0.8% in the first three months, having dropped 23.1% last year. The RAPI for 0.30- and 0.50-carat stones went up 10.1% and 1.9% respectively during the first quarter. Prices rose in the immediate aftermath of the Trump announcement as dealers sought to absorb the anticipated higher import costs.
Moore expects that there will yet be steady purchases and restocking this year, since many independent jewelers had a positive sell-through last year, and the momentum appears to have continued through the beginning of 2025.
For now, the traditionally slower second quarter is giving businesses a chance to assess the tariffs’ impact, he says, though there is obviously still turmoil and uncertainty.
“The mood is constantly changing, as people don’t know what’s happening,” says Smith. “It’s very difficult to gain a good sense of where things are going if you have daily chaos.”
Main: Josephine ring by Jade Ruzzo in 18-karat gold with a green tourmaline. (Jade Ruzzo/Zee-Al-Eid Ahmad and Aly Akber)
