Some 17 years ago, in the aftermath of the financial crisis of late 2008 and in the ensuing recession in the United States and across Europe, as well as other parts of the globe, I had an idea for an article.
I would base it on what was becoming known as the “new normal”. The financial situation had become very precarious following the enormous hits that the western economies had taken. It seemed that everything we knew about global finances was changing by the day.
The diamond industry, along with many others, was being required to rethink how it did business. Demand had fallen sharply and there were global tensions of the kind that few, if any, could remember on such a scale. Perhaps the greatest issue was the lack of certainty.
As we now know, the global financial system gradually returned from that low point in the final months of 2008 and much of 2009 to a more stable position, but an issue that had become very clear was that we would never return to an era of stability and certainty.
The more things change...
Fast forward to 2026 and we see that the diamond industry is again facing strong headwinds. Among the issues now are trade tensions, the rise in popularity and sales of lab-grown diamonds, and a fragmented global market that have slashed the possibility of predictability.
If we go back around 20 years, the diamond trade at the time could rightly describe itself as an excellent example of globalization. The pattern was clear: rough diamonds were largely mined in Africa, for the most part traded at De Beers’ HQ in London and in Antwerp, mostly cut and polished in India, and sold in several large trading centers such as New York, London, Mumbai, Antwerp and Hong Kong.
How today’s generation of the diamond industry players must wish for a return to those days. Today’s market is sharply fragmented and suffers from a range of tariffs and sanctions. In addition, the industry is faced with customers who are looking for something different and highly specific – and at a price point they are often unwilling to exceed.
A Year of Major Disruptions
The biggest shock to the diamond trade last year came from growing tensions between the United States and India. What started as political pressure turned into steep tariffs on Indian goods, at one point reaching 50%. These measures were initially linked to India’s oil trade with Russia, but they ended up hitting the diamond industry hard.
India is the world’s diamond cutting center, and the tariffs disrupted supply chains in a major way. Exports to the US dropped, inventories became unbalanced, and prices began to differ significantly between markets. In some cases, diamonds were noticeably more expensive in the US than in India.
Manufacturers responded by cutting back production to avoid excess stock. While large companies managed to adapt, many smaller factories struggled, with layoffs and closures becoming common.
Throughout the year, uncertainty remained high. First, no one knew exactly how tariffs would be implemented. Later, ongoing negotiations and legal challenges kept the situation unclear. Some businesses tried to adjust by shifting operations to places such as Antwerp, where tariffs were lower.
Although a temporary agreement reduced tariffs, further legal decisions in the US brought back uncertainty about what comes next.
The Growing Impact of Lab-Grown Diamonds
We only need to go back less than a decade to identify the first signs of panic in the natural diamond sector about Lab-Grown Diamonds (LGDs). Leaders of the segment made clear their distaste of these diamonds and tried to persuade consumers that they should avoid them. Who would rightly propose to his partner for life with a cheap imitation diamond, they would comment.
The problem was that customers – especially younger ones – were not listening. They were persuaded by the lower price points. As a result, LGDs have become a permanent part of the market.
Natural diamond producers were slow to reduce output, even as demand weakened. This led to oversupply and falling prices. At the same time, consumers became more selective, often comparing natural stones to the near-perfect appearance of lab-grown ones.
In particular, buyers started demanding higher-quality natural diamonds, rejecting stones with visible flaws. This made it harder to sell lower-grade inventory.
In the market for fancy shapes, lab-grown diamonds raised expectations even further. Customers began expecting natural diamonds to match the precision and brilliance of synthetic stones.
Large retail chains adapted better to this shift, using high sales volumes to stay competitive. Smaller, independent jewelers often stepped away from selling lab-grown diamonds and focused on natural stones instead, which created the impression that demand for synthetics had slowed—when in reality, it had just shifted to bigger players.
Changes in the Rough Diamond Market
The rough diamond market also saw a major shift. Previously, mining companies had the upper hand, setting prices and terms. In 2025, the balance changed, especially for smaller stones. Buyers gained more negotiating power, and rough diamonds were often sold at lower prices.
This allowed manufacturers to produce polished diamonds more cheaply, which in turn pushed polished prices down even further.
Many miners continued using auction-style sales (tenders), which are efficient but tend to bring in lower prices during weak market conditions compared to fixed allocation systems.
A Divided Pricing Landscape
One of the most striking developments has been the split of the polished diamond market into three distinct segments:
- Smaller or lower-quality stones have suffered the most. Many buyers now prefer lab-grown alternatives, leading to falling prices and growing inventories.
- Engagement diamonds of around 1 carat are under pressure. Customers expect near-perfect stones, and if natural diamonds don’t meet those expectations, they often choose synthetic ones instead.
- Luxury diamonds of 2 carats and above have remained relatively stable. High-end buyers continue to value natural diamonds, and lab-grown options have less influence in this segment.
Complicating the situation is the fact that because these categories behave so differently, a single strategy no longer works across the entire market.
Trends in Shapes and Styles
Another complicating factor is the growing popularity of fancy-shaped diamonds, especially elongated ones. While round diamonds still dominate overall sales, shapes like oval, marquise, cushion, and radiant have gained ground in the premium segment.
The marquise shape, in particular, has become highly sought after due to limited supply. Ovals remained popular, but increased production eventually led to oversupply, especially for stones that didn’t meet required proportions.
Manufacturers tried to respond to demand by shifting production, but not all stones met consumer expectations, which led to softer prices in some categories.
Larger fancy-shaped diamonds (2 carats and above) were especially in demand, with limited supply pushing prices upward.
Final words...
Uncertainty is no longer an exception – it’s the new normal.
The diamond industry now needs to build strategies that assume constant change. Those that can adapt quickly and understand how uncertainty affects both customers and competitors will have an advantage.
At the same time, the industry faces deeper structural challenges. Supply chains are less stable, competition is increasing, and oversupply remains a serious issue in several segments.
There is also growing concern about the future of major players like De Beers, as ownership changes could alter how rough diamonds are sold.
In short, the diamond industry is entering a new phase – one defined not by stability, but by constant change.
Abraham Dayan for Rough&Polished from Tel Aviv
