US Supreme Court Verdict Reshapes Trade Outlook for Indian GJ Exports
A landmark ruling by the Supreme Court of the United States in February 2026 has significantly altered the trade environment for Indian gems and jewellery exports to the US. By invalidating executive-imposed “reciprocal tariffs” that had surged to as high as 50%, the Court has delivered major relief to an industry strained by intensifying trade frictions.
In place of these steep duties, a temporary 10% surcharge — effective February 24, 2026 — has been introduced, marking a decisive shift for Indian exporters and providing renewed momentum to bilateral trade ties.
Pre-Ruling Trade Scenario
Before the judgment, India’s gems and jewellery sector — long a dominant force in global markets — faced severe headwinds due to the reciprocal tariff regime. Introduced amid broader trade disputes, these tariffs created formidable barriers in the US, traditionally the largest market for Indian jewellery exports.
Legal Significance of the Decision
The Court’s ruling is understood to rest on constitutional grounds, potentially questioning the executive branch’s unilateral authority to impose such tariffs or scrutinising the statutory framework under which they were enacted.
While detailed legal analysis is ongoing, the judgment sets an important precedent for future trade policy and places clearer limits on executive powers in tariff matters.
Impact Assessment
1. Shift in Tariff Structure
Earlier Framework
- Reciprocal tariffs of up to 50%
- Significant erosion of price competitiveness
- Sharp contraction in export volumes
Revised Framework (from 24 February 2026)
- Temporary 10% surcharge
- Around 80% reduction in tariff burden
- More viable and predictable cost structure for exporters
2. Export Recovery Outlook
The earlier tariff regime led to a steep 74% fall in cut and polished diamond exports, underscoring the strain on the sector.
Industry estimates suggest:
- Short-term recovery (Q2–Q3 2026): 25–35% rebound in export volumes
- Medium-term stabilisation (Q4 2026–Q1 2027): Recovery to 70–80% of pre-dispute levels
- Long-term prospects (2027 onward): Potential for market expansion and renewed growth
3. Competitive Rebalancing
Market Dynamics
- Restoration of a level playing field with US manufacturers and third-country suppliers
- Greater pricing flexibility following a 40-percentage-point tariff reduction
- Scope to reclaim lost market share
Regional Economic Benefits
Key Indian production and export centres poised to gain include:
- Kolkata — a major gem processing hub
- Surat — the world’s leading diamond cutting centre
- Mumbai — the country’s primary trading and export base
- Jaipur — renowned for traditional jewellery and coloured gemstones
Overall, the ruling signals a crucial reset for Indian exporters, offering renewed stability, improved competitiveness, and stronger long-term trade prospects in the US market.