President Donald Trump's recent decision to issue a 60-day waiver of the Jones Act – allowing oil, natural gas, fertilizer, and coal to be transported between U.S. ports on foreign vessels amid the conflict with Iran – was smart, strategic, and should kick off an important conversation: Why do we still have the Jones Act at all?
For decades, the antiquated law has constrained the efficient movement of goods and raised costs for American consumers, something this administration clearly understands. By acting so decisively, the president is keeping his promise to lower costs for everyday American families.
Congress should take note of the White House's example and make this a permanent reform.
Also known as the Merchant Marine Act of 1920, the Jones Act requires that cargo shipped between U.S. ports travel on vessels that are American-built, American-owned, American-flagged, and crewed primarily by Americans.
The law was originally intended to ensure a strong domestic maritime industry. Instead, it has become a textbook example of how interfering with the free market can backfire – constraining supply, stifling competition, driving up costs for American families, and decimating the very industry it was meant to protect.
It's simple economics – when you limit supply, you increase costs. Because of the Jones Act, American-made ships cost four to eight times more than similar vessels built overseas. Operating them is also more than twice as expensive, largely due to U.S. labor and regulatory costs.
This has had predictable results: fewer Jones Act-eligible ships are built, meaning fewer are in service, which drives up shipping costs. As of 2024, the U.S. had just 92 Jones Act-eligible oceangoing cargo vessels in that fleet category, a tiny fraction of the global commercial fleet. Couple that with higher operating costs, and it's no wonder that Jones Act-compliant ships charge up to ten times more than international ones.
In practice, it can be cheaper to import gas from overseas than ship it domestically, in part because Jones Act shipping constraints raise the cost of moving fuel between U.S. ports. California, for instance, often relies on fuel from Asia and the Middle East, even though Gulf Coast refineries are closer.
A similar dynamic plays out on the East Coast. The United States is the world's largest exporter of liquefied natural gas. However, there are currently no liquefied natural gas tanker ships that are eligible under the Jones Act. As a result, regions such as New England have at times relied on overseas imports, including a Russian-linked shipment during a particularly brutal cold spell in 2018.
One recent study estimates that the Jones Act increases U.S. petroleum costs by roughly $769 million per year.
The burden falls heaviest on noncontiguous states and territories. Hawaii, Alaska, and Puerto Rico face some of the highest shipping costs in the nation, which are naturally passed on to businesses and households. In Hawaii alone, one study has estimated that the Jones Act imposes about $1.2 billion in annual costs on the economy, along with 9,100 fewer jobs and about $1,800 per year in added costs for the average family.
And what has the United States gained in return? Certainly not a robust shipbuilding industry. The U.S. accounts for a tiny share of global commercial shipbuilding—measured in fractions of a percent. The nation has just two shipyards that build large commercial cargo ships, with individual yards typically producing just one or two vessels per year. Meanwhile, South Korea churns out more than 200 and China more than 1,000 annually.
It's clear that the Jones Act has not preserved American maritime strength – it has hollowed it out. A recent academic study estimates that repealing the Jones Act could boost U.S. GDP by about $3.2 billion annually.
The current geopolitical moment underscores the urgency of reform. Energy markets are volatile, and supply disruptions can ripple quickly through the economy. A law that must be suspended in times of emergency is not a sound policy – it is a liability.
Congress has a clear choice. It can allow the Jones Act to snap back into place, reimposing higher costs and unnecessary constraints, or it can recognize reality and act in the national interest.
A century-old law that distorts markets, weakens industry, and burdens consumers has outlived whatever usefulness it once had. It is time to let it go once and for all.
Kent Strang is Managing Director for Americans for Prosperity.
Read Full Article »