The Sunday Times: Issue #25

It took me a lot longer than normal to decide what to write about this week. There are fun things I want to talk to you about like what's in the works for Paradiso Pt. II, a wrap up of my trip to Portugal on the blog, the beautiful late summer Florida sunsets, etc, but what is looming and what is a lot less fun to talk about is tariffs. I put off deciding what to write about because I would rather just ignore the issue; it's complicated, it changes daily, and it is very, very bad news for a lot of folks in my industry. Then I realized that's exactly why I should write about it. So the fun stuff is at the bottom of this issue in case you want to skip to it ;)

So pour yourself a cup of tea and get comfy.

"Life can be magnificent and overwhelming - that is the whole tragedy. Without beauty, love, or danger it would almost be easy to live."

- Albert Camus

CONFRONTING TARIFFS

AND THE INEVITABLE RISE OF JEWELRY PRICES

At the beginning of this month, Trump's tariffs went into effect for nearly 90 countries. Posing as incentives for said countries to invest in American manufacturing or investment to balance trade, it is widely understood that tariffs are instead often passed onto the consumer rather than outrightly absorbed by the companies of countries on which the tariffs were imposed. As Sara Yood, the President, CEO, and General Council of the Jeweler's Vigilance Committee (JVC) said to the Observer in this article, “Tariffs are paid by the U.S. importer, not the foreign business that exported the goods or the countries from where the goods were exported,” she noted. “Even a 10 percent tariff on foreign goods adds up extremely quickly at the value scale of jewelry.”

With gold prices at an already historic high, the news of extreme tariffs on countries integral to the jewelry trade like India and Switzerland came as quite a shock. A 50% tariff will be levied on India, alarming the gem and jewelry industry there. India is the primary source for US polished (cut) diamonds, processing around 90% of the world's diamonds and 50% of the US supply, so you can imagine the impact a 50% tariff will have. As for colored stones, India is the second-largest source after Thailand, supplying about 15% imported into the US. India is also a major jewelry manufacturing hub, as well as China (but China's tariffs are on a 90-day pause so that remains to be determined).

It is hard to overstate Switzerland's integral role in the watch and gold industry. In fact, the Swiss gold refining industry is responsible for two-thirds of the Swiss exports to the US and is driving the widening trade deficit between the two countries. As Americans invested more heavily in Swiss-refined gold when Trump upended the world trade order earlier this year, that deficit only widened, and ironically resulted in an even more outrageous tariff for the country: 39%, one of the highest rates in the world. But strangely, gold is exempt from the tariffs? What is not exempt is the watch industry, which fears the worst. "The dollar is weak, the Swiss franc is high and gold is at an all-time high so it’s kind of like the perfect storm,” Steven Holtzman, vice chairman at CD Peacock in Chicago, says in this Robb Report article. “Prices have gone up, margins have gone down. I don’t think it’s good for anybody."

So it seems that, in general, jewelry and watch prices will be increasing in order to cover the incurred costs from importing materials from foreign suppliers. US jewelry companies will have to rethink their imports and manufacturing locations in order to stay afloat. And it isn't possible to skirt the tariffs by say, rerouting gems from India to Singapore first, as a 40% transshipment penalty as been put into effect for any country seeking to dodge the tariffs.

I love how Olga Gonzalez summed up her article for Observer by saying,

"Remember, jewelry has been a long-term investment for generations. Unlike fast fashion, a thoughtfully chosen piece can last for generations. The goal isn’t to buy more. It is to buy better. So, if you’re going to spend, then spend where it counts. Choose pieces that reflect your values, your story and your hopes for the future. Jewelry may be facing a time of economic uncertainty, but it remains, now more than ever, one of the most personal, enduring and expressive purchases you can make."

Here are some articles I found interesting and informative if you'd like to read up more on this topic:

A Trump Tariff Tracker by Country Graph

NY Times Tariff Tracker Map

JCK Article on India

NY Times Article On Switzerland (free)

Keep in mind, if you google for other articles on this topic, many are already out of date, even if they were written in recent weeks as the tariff rates are changing rapidly.

WHAT THIS MEANS FOR PALM SUNDAY

AND OUR SPECIFIC JEWELRY PRACTICES

For the very short-term, our prices will not change due to tariffs. Only gold and silver prices will affect the prices of the upcoming collections as all the stones for Paradiso Pt. II have been purchased and our manufacturing is all done within Florida.

As for future collections, I can foresee small increases in gold prices outside of the normal market fluctuations happening due to the tariffs places on countries with Fairmined Gold mines such as Peru (10%), Ecuador (15%), and Colombia (10%). Also, with the elimination of de minimis ending August 29th, even goods under $800 which were previously exempt from duties will be inspected and taxed (read more on de minimis here). It will be thoughtfully considered whether the increase in material price will be absorbed or worked into the price of the jewelry as transparency and ethical pricing is at the core of Palm Sunday.

For stone purchasing next year, only time will tell what the market will bring and how many of my wonderful suppliers will be able to weather the storm. So many of them have scrapped together everything they can to bring responsible stones to the US jewelry trade and even small changes in their profit margin could spell the end of their endeavors. It is already sad to know that I won't be meeting many new miners at the Tucson Gem Show next year because of the new $15,000 Bond some tourist visas will require. Many of my stones come from Africa, and they are facing 10, 15, and even 30% tariffs depending on their country. Thailand is at 19% and Vietman is at 20%. I can safely predict that this will mean higher stone prices. Many jewelers may choose to instead work with US-mined stones, but I do feel a responsibility to my current suppliers. It is not their fault that they find themselves in this situation and I plan to stay loyal to them during this crazy time.

I consider the choices I made at the outset of Palm Sunday and am thankful that I do not manufacture overseas, I don't use a lot of stones from India and China, and I source my packaging from Italy, but I know that I am in a very privileged position to be able to afford to do so. Many jewelry companies will face difficult decisions in the near future. I am hopeful that some will choose a more responsible route to sourcing and manufacturing, but even in doing so, many will not be able to absorb the costs associated.

Check in with your favorite jewelry suppliers (or any small business you love), they need your support now more than ever. We're all in this together.

NOW FUN STUFF

The rest of the blog posts about my travels in Portugal have been published! You can check them out here. I go into more detail with photos about Lisbon, Ponta Delgada, and the rest of the Azores. I hope you enjoy reading and I hope they are helpful if you plan to visit in the future.

WHAT'S ON MY BENCH

SOME NEW VESSELS FOR PT. II AND AN EXPERIMENT WITH A PEARL HOURGLASS IDEA

Lastly, there are still a few vessels and fontanellas available and ready-to-ship at Catbird but they are selling quick! Grab one soon if you plan to! www.catbirdnyc.com