The United States has replaced its temporary Section 122 surcharge with a Section 301 tariff regime with no automatic lapse, maintaining a 10% additional duty on Indian exports, including natural diamonds, lab-grown diamonds, coloured gemstones and jewellery, from 24 July 2026.

Policy Shift & Legal Framework

• Transition to Section 301: Following USTR forced-labour investigations into 60 economies, President Trump signed a Presidential Memorandum replacing temporary Section 122 surcharges with Section 301 tariffs, effective 12:01 a.m. EDT on 24 July.
• No Expiry Date: Unlike the time-limited Section 122 surcharge, Section 301 tariffs have no statutory expiry and remain subject to modification or termination by the USTR.
• Seamless Transition: Section 122 expired precisely as Section 301 took effect, avoiding any duty gaps or overlapping tariffs. Imports must now be reported under HTSUS heading 9903.05.44.

India’s Tariff Rate & Relative Advantage

• 10% Tariff Band: India secured a 10% tariff rate (unchanged from its previous rate) after banning forced-labour imports post-5 June 2026.
• Competitive Edge Over Rivals: India holds a 2.5 percentage-point advantage over competitors like China, Hong Kong, Thailand, Türkiye, the UAE, Israel, and Vietnam, all of which face a 12.5% tariff.

Impact on Product Categories

• Natural Diamonds & Colored Gemstones: Previously entered duty-free under MFN rates; now face a 10% Section 301 duty.
• Lab-Grown & Synthetic Stones: Subject to a 10% Section 301 duty.
• Finished Jewellery: Existing MFN duty (5.5%–6%) combines with the 10% Section 301 tariff, raising the total effective import duty to 15.5%–16%.

 Major Competitive Disadvantages

• EU & Swiss Exemptions: Natural diamonds, pearls, and colored stones (HS 7101–7103) from the EU and Switzerland are exempt from Section 301 duties, whereas identical Indian-origin goods face the full 10% tariff.
• Out-of-Scope Nations: Primary diamond producers (e.g., Botswana, Namibia, DRC, Zimbabwe) fall outside Section 301 entirely.
• Substantial Transformation: Goods processed or substantially transformed in India are treated as Indian-origin, triggering the 10% duty.

 In-Transit Logistics & Compliance Advice

• Limited Ocean Freight Exemption: In-transit exemptions apply only to ocean freight loaded before 24 July and entered before 28 July. Air cargo, couriers, and hand-carried shipments—the primary delivery methods for Indian gems—do not qualify.
• Broker & Return Guidance: Exporters are urged to coordinate with customs brokers for accurate classification and are warned that goods returned under Chapter 98 are not automatically exempt and remain under CBP review.