• US President Donald Trump imposed 50% tariffs on Indian exports, disrupting a country that handles 90% of the world’s diamond polishing.

• Botswana’s diamond output, sales, and fiscal revenues continued to fall in 2024–2025 amid weak demand and rising inventories.

• Botswana’s government warned that tariffs could delay production recovery and deepen a second consecutive year of economic contraction.

Botswana, the world’s second-largest diamond producer, faced rising economic risks as global demand and prices weakened and as US President Donald Trump imposed new trade barriers. Trump introduced tariffs of 50% on Indian exports, a critical link in the global diamond supply chain, where 90% of mined diamonds undergo cutting and polishing.

Botswana also expressed concern over 15% tariffs that Trump imposed on the country’s exports to the United States. However, Botswana’s Ministry of Finance warned in a budget document published this week that tariffs on India posed a greater threat to the global diamond industry, which remains Botswana’s main export and economic engine.

The ministry stated that the United States accounted for about 55% of global diamond demand, while India supplied 41% of the US market. Botswana represented only 2.5% of US diamond imports, which limited the direct impact of US tariffs on its exports. However, the measures strongly affected India, a key commercial partner for Botswana’s diamond industry.

After extraction and sale, a large share of Botswana’s diamonds passed through India for polishing, as Indian factories processed about 90% of global diamond output. As a result, tariffs targeting India threatened to disrupt Botswana’s export flows indirectly.

Chain reaction

Botswana’s government warned that higher US tariffs risked triggering a chain reaction in an industry already weakened by falling prices, slowing sales, and rising competition from synthetic diamonds. Botswana’s diamond production fell by 3.2% in the first nine months of 2025 to 13.3 million carats, after output dropped 28% year-on-year in 2024. During the first half of 2025, Botswana’s diamond sales also declined 13.2% year-on-year.

By the end of December 2025, Botswana’s diamond inventories reached 12 million carats, nearly double the government’s normal ceiling of 6.5 million carats. De Beers, the country’s main producer, typically held back supply during downturns to support prices.

“Given current inventory levels, these tariffs could delay efforts to reduce large stockpiles, which would further delay any plans to increase production,” the Ministry of Finance said.

The ministry projected that Botswana’s economy would contract for a second consecutive year in 2025, with GDP falling 3%, despite average growth of 0.9% during the first three quarters of the year. Authorities forecast mining revenues of 10.3 billion pula ($748 million) for the 2025/26 fiscal year, far below the historical annual average of 25.3 billion pula.

The decline would also reduce government tax revenues and limit funding for support programs targeting non-mining sectors of the economy.

What room for maneuver?

Like several African economies, Botswana absorbed the shock of the new US trade policy. Negotiations between the United States and India continued, but officials faced uncertainty over any tariff reductions.

On the market side, the government projected only moderate revenue growth even if diamond prices returned to historical levels of about $98.9 per carat between 2025 and 2028. Authorities attributed the limited upside to constrained production capacity.

“Production should remain below pre-crisis trends due to higher production costs linked to aging diamond mines, changing consumer preferences, and competition from synthetic diamonds, which now represent 20% to 30% of the diamond market,” the Ministry of Finance said. “It is therefore necessary to accelerate efforts to mobilize domestic revenue.”

Botswana’s authorities increased their focus on economic diversification and the development of other minerals, including copper. The government planned to launch an “Impact Citizenship Program” that would grant Botswana passports to 5,000 families over five years in exchange for payments ranging from $75,000 to $90,000, generating at least $375 million in revenue.

A five-year national development plan worth 388 billion pula, or about $27 billion, presented in October, aimed to support ongoing structural reforms.

This article was initially published in French by Emiliano Tossou

Adapted in English by Ange Jason Quenum