In mid-March, President Trump issued a partial 60-day waiver of the Jones Act, a century-old law that requires ships including barges and tankers carrying cargo or passengers between U.S. ports must be built domestically, owned by Americans, and crewed primarily by U.S. citizens.
The administration says the waiver aims to help mitigate disruptions in the energy markets, and destabilization of the broader Persian Gulf, resulting from the U.S.-Israeli conflict with Iran. While some analysts note the waiver will likely have a minimal effect on fuel prices in the short term, many argue the more important lesson is that a law harmful enough to require emergency suspension is a law in need of permanent reform.
NEFI is aware of its impact on fuel dealers and has advocated for repeal of the Jones Act for many years. The archaic law imposes additional shipping costs while creating supply chokepoints in regions that lack easy access to pipelines or rail transport. This includes heating fuel distributors and their customers in the Northeast, a region heavily reliant on seaborne transport for fuel delivery.
U.S. Representative Ed Case of Hawaii put it plainly: “That we even have to waive the Jones Act to try to hold down skyrocketing fuel and other energy costs is a blanket admission of [the law’s] crippling effects on our economy.”
I believe the waiver is an indictment of the law, and Colin Grabow, a Jones Act expert at the Cato Institute concurs, noting that the White House is framing it as part of a broader effort to strengthen US supply chains. “But the need to suspend the law to achieve that goal is telling,” he argues. “If the Jones Act is a pillar of economic and national security as its defenders commonly claim, why is it being waived when pressure on the country is mounting?”
Grabow notes that only 54 tankers nationwide are Jones Act compliant. As a recent 60 Minutes report made plain, the Jones Act, which was sold for a century as the guardian of American shipbuilding, has presided over its near extinction: China builds roughly 1,000 cargo ships a year; the United States builds perhaps three. Despite its proponents’ claims, the Jones Act does not strengthen natural security – it weakens it.
“A policy that imposes high costs in peacetime, is waived as a relief valve in times of crisis, and provides little of its advertised benefits, is difficult to justify on either economic or national security grounds,” Grabow concludes.
NEFI is looking to seize this opportunity to press for repeal of the Jones Act or, at minimum, substantive reform. We are engaging Capitol Hill allies and building the broadest possible coalition for lasting change. Stay tuned to future NEFI publications for updates.
For more information on actions the administration has taken to address price and supply issues related to the war and the closure of the Strait of Hormuz, see the article here.
