Is the Jones Act finally sinking?

by Keli'i Akina, Ph.D., President / CEO, Grassroot Institute of Hawaii

Something has gone very wrong if it becomes necessary during a time of war to waive a law that was intended to strengthen national security.

Earlier this week, President Donald Trump issued a 60-day waiver of the Jones Act for the transport of certain energy products and fertilizer. 

As you might already know, the Jones Act is a protectionist maritime law that has been in place for more than 100 years. Most notably, it requires that goods travel between U.S. ports only on vessels that are flagged and built in the U.S. and mostly owned and crewed by American citizens. In other words, foreign ships — which are much less expensive to build — are prohibited from transporting goods from one U.S. port to another. 

Defenders of the Jones Act claim the law is needed to ensure America has a strong merchant marine ready to assist in times of emergency, and groups representing shipbuilders and shipping companies heavily lobby U.S. lawmakers to keep it on the books.

Yet shipbuilding in America has been declining for decades, and the country’s fleet of ships that comply with the Jones Act has dwindled by more than 60% since 1980. 

It is therefore perhaps not surprising that foreign ships were being chartered to carry goods between American ports within 24 hours of Trump’s recent Jones Act waiver going into effect. 

One of those voyages is scheduled to go from New York and Hawaii, which suggests that foreign ships are more willing to stop in Hawaii than defenders of the Jones Act claim.

Back in 2020, my colleagues at the Grassroot Institute of Hawaii published a study that concluded the Jones Act costs Hawaii’s economy $1.2 billion per year. You can see Grassroot’s more recent Jones Act work here.

As U.S. Rep. Ed Case said in a recent press release: “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 Jones Act’s crippling effects on our economy, especially Hawai‘i and the other non-continent parts of our country (island territories and Alaska) that are wholly dependent on shipping.”

The recent waiver is also a recognition that the existing Jones Act fleet is inadequate to respond in emergencies. Only 54 oil tankers comply with the Jones Act, out of a global fleet of nearly 7,500. Even worse, only one LNG tanker in the world complies with the Jones Act, and it operates under a special exemption for Puerto Rico. Further, there are zero Jones Act ships ideal for transporting fertilizer. 

It has become increasingly obvious that the Jones Act is a relic from another era. When nearly every emergency, from hurricanes to military action, raises the need for a Jones Act waiver, it is time to stop issuing temporary waivers and start looking at permanent reform. 

A law that impedes shipping and raises costs during emergencies cannot be justified under the guise of national security. 

We should all hope the latest waiver persuades Congress to finally update the Jones Act for the 21st century.

E hana kākou! (Lets work together!)