On Friday, March 11, President Biden announced a ban on the importation of certain Russian Federation products, including diamonds.  This action was taken in response to the continued aggression of the Russian Federation against Ukraine.  Since that announcement, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) has issued additional FAQ guidance on the importation ban that clarifies what U.S. jewelry businesses must do going forward.

The ban on importation of diamonds from Russia is limited to the U.S. harmonized tariff codes 7102.31.00 and 7102.39.00, which are the tariff codes for “unworked or simply sawn, cleaved or bruted” diamonds, or what the trade generally refers to as “rough diamonds”.  Under U.S. Customs regulations and interpretation based on the OFAC FAQs, rough diamonds from the Russian Federation which are cut and polished in a second country are “substantially transformed” by the cutting and polishing, becoming a product of that second country.  Under this guidance, rough diamonds imported from Russia into a country that has not implemented sanctions or a ban and then cut and polished are currently legal to import into the U.S. as they will fall under a separate harmonized tariff code.

It is certainly possible that countries that have traditionally been cutting centers for rough diamonds may also implement a ban on importing Russian diamonds, further limiting their pathways into the U.S.  In addition, the U.S. government could decide to further limit imports of those products which originate in Russia and are substantially transformed elsewhere, or add additional harmonized tariff codes to the importation ban.  JVC recommends that members proceed with extreme caution regarding diamond imports, as the risk of additional future limitations is high.

The full FAQ from OFAC is available here.

(Photo: Getty Images)

(Source: Jewelers Board of Trade, March 11 , 2022)