Will Trump’s Trade War Make Engagement Rings More Expensive?
A closer look at the trade war and its impact on the price of fine jewelry.
The trade war is a moving target lately, as are tariffs, and it’s making the stock market look more like the Patagonia logo every day. With Andes-sized peaks and valleys in every major stock index, it’s movements are just as inscrutable as the relationship between Trump and Xi Jinping. The only certainty right now is that it’s anybody’s guess how the trade war will be resolved. If you’ve been following the trade war closely, you’ve probably heard that it’s starting to affect the prices of the products you buy. If you’re in the market for a piece of fine jewelry, that could mean a major increase in the price you’ll pay. But, to understand how tariffs affect the prices of fine jewelry, you have to understand where jewelry comes from and how it’s made. Let’s dig in.
WHICH PRODUCTS ARE AFFECTED BY THE TRADE WAR?
The recent list of tariffs includes a 25% tax on all the sparkly favorites: diamonds and synthetic diamonds; precious and semiprecious stones; rubies, sapphires, and emeralds; silver jewelry; gold necklaces; synthetic gemstones; gold and silver. The result? Already expensive products just got more expensive. A 25% tax on a $100 pair of shoes is unfortunate, but a 25% tax on a $10,000 diamond is an entirely different matter.
But how much jewelry does the U.S. import from China, and is it costume jewelry or fine jewelry with real diamonds and gemstones? Is China where your engagement ring comes from?
HOW MUCH JEWELRY DOES CHINA MAKE, REALLY?
While the thought of a factory in China may conjure up images of iPhones and flat-screen T.V.s, over the past 30 years, Shenzhen has emerged as an important manufacturing center for jewelry and gems. Thanks in large part to jewelry, Shenzhen has experienced rapid economic growth.
“The city’s GDP rose from 1.96 million Chinese renminbi (RMB) in 1979 to 1,600.20 billion RMB (U.S. $267 billion) in 2013. The growth rate in Gross Domestic Product was 8.8 percent from 2013 to 2014, which was higher than the overall growth rate for all of China.” GIA
Shenzhen’s development started in the 80s when many Hong Kong manufacturers began moving production to China. At the same time, the government started piloting a gold trading policy which would allow customers to purchase gold for the first time in state-owned malls. Over the next twenty years as regulations loosened, and consumers had more money to spend on luxury products, demand, and production exploded.
In 2003 China took a step further to form gold and diamond exchanges which further accelerated growth. Today China is a massive exporter of costume jewelry, gemstones, and diamond jewelry.
Last year the U.S. imported “$2.09 billion in jewelry, or 15% of all U.S. jewelry imports; $233 million in gem diamonds, (1% of all diamond imports) and $1.01 billion in gemstones (33% of all gemstone imports).” U.S. Census Bureau
Let’s see who’s buying what and why.
ARE DIAMONDS MADE IN CHINA?
You can exhale now. Only 1% of diamonds are imported directly from China. 99% of the world’s rough diamonds pass through Surat, India to be cut and polished. 85% of the world’s lab-grown and natural diamonds are also imported from India. China is not known for its diamond mines (though it does have them). The most notable of which is the Changma Diamond Mine, which has produced over 1 million carats to date.
So, if you’re buying a loose diamond in the U.S., it was most likely not imported from China. No import = no tariff = no increase in price.
In fact, buying a diamond may be more affordable now than in recent years. The price of mined diamonds has been falling over the past few years, particularly in the 1-3 carat range. This price drop is expected to continue throughout 2019 into 2020. There are too many large diamonds coming out of mines and not enough willing purchasers. Less demand = lower prices from wholesalers and retailers in search of liquidity.
Further aggravating the markets is, you guessed it, the trade war. While China was rapidly becoming one of the largest purchasers of diamonds, things have slowed down as economic uncertainty has increased. To complicate matters further, lab-diamonds are growing at a staggering 8% annually, cannibalizing mined diamond sales. Ironically, the trade war may be making it more affordable to get engaged, particularly if you’re in the market for a large, mined diamond.
Lab diamonds are bypassing tariffs in a similar fashion. While China is one of the largest manufacturers of lab-grown diamonds, the vast majority of them are cut and polished in India. The diamonds are then sold to wholesalers and jewelry retailers around the world. They’re all imported from India, not China, so the tariffs don’t apply.
Fun fact — diamonds grown in the U.S. are also generally sent to India for cutting and polishing.
If you want to be 100% sure you’re not paying the trade-war penalty, buy local. Frank Darling carries diamonds grown in the U.S. by 100% renewable energy.
WILL THE TRADE WAR AFFECT THE JEWELRY YOU SEE IN STORES
Much of the finished jewelry in store display cases was made in China. The U.S. imports 15% of its jewelry from China. It’s not just costume jewelry. Fine jewelry as well as mass-market engagement ring settings are often produced overseas and imported.
Unless you’re working with a local jeweler or you know your piece was made in the United States, there’s a good chance the piece was made overseas. This is especially true when it comes to mall jewelers and large online platforms. Heck, even Tiffany produces their silver pieces overseas.
If you don’t want to risk getting hit with a price increase — shop with a brand that’s transparent about their supply chain. All Frank Darling rings (bands included) are handmade in NYC for your diamond. It’s why we can do quarter sizes without blinking an eye, and how we make sure your diamond is perfectly fit.
WHERE DO GEMSTONES COME FROM?
Let’s talk about gemstones. In the mood for Morganite? Maybe press pause until after the trade-war winds down. The U.S. imports a whopping 33% of gems from China, and China is a massive player in the gemstone trade.
DOES CHINA EXPORT GOLD TOO?
China mines gold, wears gold, and makes other things from it too. But, they don’t export it — as least not as a raw material. China is the world’s largest gold producer, and they’re also the world’s largest importer of gold.
“They sucked in around 1,500 tonnes of metal worth some $60 billion last year, according to its customs data – equivalent to one-third of the world’s total supply.” Reuters
So while it’s unlikely you’ll be buying gold that’s been subject to the recent tariff increase, you may still want to ask questions about where your gold ring originally came from. Gold mining is environmentally destructive and unnecessary. Recycled gold from post-consumer sources is readily available and significantly better for the environment.
By choosing Frank Darling, you can rest easy knowing your ring is being made custom for you at a fair price by local craftspeople. The people making your ring have decades of experience producing jewelry for some of the world’s finest luxury brands. And all gold used is recycled and earth-friendly.
READY TO GET STARTED?
Every great ring starts with a great setting, but picking a setting out online is hard — or at least it used to be. At Frank Darling, all our engagement ring settings are available to try at home, for free. It’s just like our website, but you can touch things.
Get started by selecting your favorite four rings. We’ll send you sterling silver size seven replicas set with 1 carat CZ stones.
Each try at home kit comes with a pre-paid return label, ring sizer, and The Handbook. A practical guide that contains all the information you’ll need to select a diamond. So, what are you waiting for? Get started.