For more than a century, the Jones Act has kept Americans from trading freely with one another to support a handful of inefficient shipyards. The purported rationale is to ensure a supply of domestic vessels the country can depend on in a crisis. What does it say about the law’s track record that it’s routinely waived during national emergencies?
The Jones Act, officially titled the Merchant Marine Act of 1920, prohibits any ship from transporting goods between two American ports unless it is U.S.-built, flagged, owned, and crewed. Foreign ships are free to land here only when they arrive from other countries. A ship built in South Korea can import merchandise from Europe to New York without issue, but it can’t then reload for another delivery in Virginia or Texas. No foreign vessel can move goods from the East Coast to the West Coast, or from any part of the country to Alaska, Hawaii, or Puerto Rico.
By mandating a captive market for U.S. shipbuilders, the Jones Act was supposed to foster a thriving domestic industry. Instead, the nation has shrunk from a global shipbuilding leader to producing barely any vessels since the law was passed. Only 92 oceangoing ships meet the Jones Act’s requirements today — currently built by just four shipyards at a sclerotic pace — and most are tankers for petroleum products rather than cargo vessels. Another 98 ships are U.S.-flagged but cannot participate in domestic trade because they were built abroad.
That meager fleet is usually insufficient to meet shipping demand when an emergency tightens the supply of essential goods, requiring an influx of foreign vessels that the Jones Act was supposed to render unnecessary. Presidents have partially waived the law 39 times in response to energy shortages, military operations, and natural disasters. Those exemptions were always short-lived, as the nation’s remaining shipbuilders lobby to end them.
This year, however, President Trump issued the broadest and longest Jones Act waiver in history to ease energy shortages from the war in Iran. As a result, a sprawling network of new trade has sprung up overnight. The waiver’s resounding success demonstrates the law’s failure. More than 200 ships have made hundreds of trips between U.S. ports, transporting millions of barrels of fuel and fertilizer to where they are needed most. In just a few months, more gasoline and jet fuel have been shipped from the Gulf Coast to the West Coast than in the prior six years, and Puerto Rico has been able to purchase American propane for the first time. All these trips have supplemented, not replaced, the Jones Act fleet’s usual routes.
The economic case for the Jones Act was discredited well before the war. Insulating domestic shipyards from competition has not made them stronger; it has made them inefficient, slow, and expensive. Building a merchant ship in the United States costs four to six times more than in Europe or Asia, so the country produces less tonnage per year than Finland or Romania.
Inflated prices for domestic seaborne trade have pushed shipments onto trucks and trains, leaving the Jones Act fleet to serve nearly nonexistent demand. Places that can only be reached by sea, like Hawaii and Puerto Rico, suffer billions of dollars in added costs and economic losses, and are often forced to import goods from other countries rather than from Americans. That’s some kind of protectionism.
Now, the national-security case for the Jones Act has also been obliterated. The law subsidizes a handful of shipbuilders at the expense of domestic shipping, leaving the nation more dependent on foreign vessels. In an emergency, it doesn’t matter where a ship was built as long as it reliably transports goods.
If it repealed the Jones Act entirely, Congress could open its waters to foreign vessels while strengthening its maritime security. Doing so would naturally boost the supply of ships engaged in domestic trade and reduce the regulatory burden on U.S.-flagged ships. The government already has programs that compensate owners of merchant ships and tankers to stand ready for wartime use; those payments can be expanded to more vessels. The military could also establish a direct subsidy for U.S. mariners in exchange for similar commitments.
Defenders of the Jones Act warn against repealing it without a sufficient replacement, but there’s no reason to “replace” a policy that makes national security worse off. This is a law that’s due to be scrapped.