Diamond Foundry Sues U.S. Over Chinese Tariffs – JCK

2022-04-21 06:11:09 By : Ms. Ann Jiang

Lab-grown diamond manufacturer Diamond Foundry has filed a lawsuit against the U.S. Trade Representative, U.S. Customs and Border Protection, and the U.S. government, among others—because, it says, the import tariffs on the diamonds it cut and polishes in China are too high.

The San Francisco–based company’s amended complaint, filed March 17 at the U.S. Court of International Trade, was stayed the same day, due to an administrative order.

In a post titled “Why We Are Suing the United States Trade Office,” Diamond Foundry complained that, because of tariffs first imposed by former President Donald Trump, the “polishing of diamonds in China was included with a penalty that exceeds the cost of the contract manufacturing service added in China.

“This egregious amount stems from the fact that the tariff is applied as a percentage of the market value of the polished diamond re-imported—rather than the value of the polishing contract service (which itself turns out less than the tariff for diamonds),” it continued, adding “the Biden administration adopted these Trump tariffs without revisiting them.”

It said: “We do not believe that doubling the cost of a product or service of a peaceful country [China] is appropriate for the United States government to effect overnight, or any good trade policy.”

The lawsuit “is largely based on a technicality of how Trump got specific timelines wrong, but so be it,” the post said. The complaint charged the government agencies “exceeded their authority” under the Trade Act of 1974.

Diamond Foundry, which grows diamonds in California and Washington and plans a factory in Spain, noted that car maker Tesla filed a similar lawsuit in 2020.

“In general. we believe the United States government should work to support domestic manufacturers like Diamond Foundry as opposed to making life difficult for them,” it added. “No diamond producer in India or Russia is exposed to these Trump/Biden tariffs.”

On Facebook, veteran diamond cutter Maarten de Witte, who worked for the company when it first started and left a year later, found the line about supporting U.S. manufacturers ironic.

He was brought on in 2016, he says, to oversee Diamond Foundry’s original vision not only to grow its diamonds in the United States, but also to cut and polish them here—a plan touted in 2016 on the company’s website and in its communications and Federal Trade Commission submission.

Eventually, “all polishing aside from minor repairs was offshored to China because it was cheaper,” De Witte said.

Diamond Foundry CEO Martin Roscheisen responds via email: “Our experience with California-based gem polishing—we did make a run at it—has been that it did not deliver the quality level that the market requires, no matter any cost consideration. Cutting and polishing diamonds requires a degree of craftsmanship, quality commitment, and human organization that we were not able to staff for in the United States, regardless of cost.”

Diamond Foundry’s site now says that all its diamonds are cut and polished “in-house at our polishing studios.” Its e-tail arm, Vrai, says its diamonds are cut “internationally by our master craftsmen in our own workshops.”

As seen in the debate over Russian diamonds, for import purposes, the U.S. government currently views a diamond’s origin as where it was “substantially transformed”—be that China, India, or elsewhere—not the country where it was mined or created. In addition, a Federal Trade Commission rule prohibits diamond growers from calling stones cut internationally as “made in the USA,” even if they were grown here.

The United States Trade Representative’s press office did not respond to a request for comment by the time of publication.

This story has been updated with comments from Martin Roscheisen.

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