A 100-year-old trade law, known as the Jones Act, is facing criticism for allegedly diminishing U.S. cargo-ship production, harming national security, and increasing costs for consumers. The legislation requires that all shipping between U.S. ports utilize vessels that are American-made, owned, crewed, and flagged.
Critics argue that high manufacturing costs in the U.S. make compliance with the Jones Act prohibitively expensive. This leads shippers to opt for more economical alternatives, such as imports or land-based transportation. Consequently, demand for U.S.-built ships has reportedly decreased, with U.S. shipyards facing closures or becoming outdated, and a shortage of mariners emerging.
The Jones Act fleet is said to comprise only 92 ships, with domestic freight movement by sea accounting for just 3.9% of the total, compared to 28% in the European Union. The law also increases the cost of goods shipped by sea, particularly impacting regions like Puerto Rico, Hawaii, and Alaska. An example cited is the severe shortage of Liquified Natural Gas (LNG) tankers that meet Jones Act requirements, making it cheaper for New England to import LNG from overseas than to purchase it domestically.
Economists have long viewed the Jones Act as a trade policy failure. Jennifer Chen of Balsa Research noted that domestic shipbuilding rates have declined decade over decade since the law's inception. Beyond economic concerns, the law's impact on national security is also a point of contention. The U.S. military has reportedly had to charter foreign ships for transporting personnel and supplies during conflicts, raising concerns about readiness in prolonged wartime scenarios, especially if foreign shipping routes were disrupted.
Calls for the repeal of the Jones Act suggest that the current legislative framework is detrimental to American jobs, consumers, and national security. The argument is that a revitalization of U.S. shipbuilding capacity is necessary to address these multifaceted issues.