Israel's Diamond Industry Faces Historic Collapse Amid US Tariffs and Government Inaction
Israel's diamond export industry is experiencing an unprecedented collapse, with cumulative exports from early 2026 to June totaling only $2.4 billion, the lowest in the sector's history. This is a steep decline compared to the 2015 peak of approximately $7 billion, more than three times higher. Total trade volume, including raw diamond imports and polished diamond exports, has also plummeted to about $4 billion from a peak of $12 billion.
Nissim Zwartz, the outgoing president of the Israel Diamond Exchange, sharply criticized Prime Minister Benjamin Netanyahu for failing to address the 12.5% US tariff imposed by former President Donald Trump on Israeli diamond imports. While other countries like Belgium have secured tariff exemptions, Israel remains burdened by this tax, which Zwartz calls a "catastrophic" economic defeat despite Israel's close strategic ties with the US. Negotiations with the US have dragged on for over a year and a half without resolution, and Zwartz warns that many diamond traders may relocate to Belgium or Dubai if the situation does not improve.
Zwartz also highlighted the impact of currency fluctuations and the global rise of lab-grown diamonds, which have further weakened demand for natural stones. He emphasized the industry's historical importance to Israel's economy and culture, noting that Israeli diamonds have adorned celebrities worldwide. Approximately 6,000 diamond professionals and their families depend on the industry, which exports about $4 billion worth of diamonds annually to the US, representing 70% of its diamond exports.
Natalie Gutman, the Israeli Diamond Supervisor, described the sector's decline as "unprecedented," citing global market shifts and competition from Dubai's tax incentives. She confirmed ongoing talks with US customs and the Israeli Treasury to reduce tariffs. Former exchange president Shmuel Schnitzer expressed cautious optimism but stressed the critical need for government intervention to maintain access to the US market.
The global diamond market is also under pressure from changing consumer preferences and increased lab-grown diamond use, exemplified by De Beers' planned sale amid falling sales and prices. The Israeli diamond sector's future hinges on resolving the tariff issue and adapting to evolving market conditions, with leadership elections for the exchange presidency expected in November following Zwartz's resignation.
