The “Jones Act” legislation [Merchant Marine Act, 1921 requires that ships calling between U.S. ports be U.S. owned, built, and manned] has long been a target of groups like the Heritage Foundation. With the Trump Administration soon to take office, will 2025 be the final year of the Jones Act?
“Project 2025” advocates who had campaigned for a radically reduced federal government will be a major force in the next Trump Administration and one of their priorities is calling for “repealing or substantially reforming the Jones Act.”
Project 2025 advocates could increase pressure on the House and Senate to support repeal of the Jones Act.
Concern by the U.S. maritime industry was expressed by the maritime news service GCaptain: “The Heritage Foundation’s controversial plan dubbed “Project 2025” is proposing significant changes to the U.S. maritime industry, including a potential transfer of the Maritime Administration (MARAD) and a substantial reform or repeal of the Jones Act … Bottom line, Project 2025’s implementation could have far-reaching implications for the U.S. maritime industry, potentially affecting nearly 650,000 American jobs and $150 billion in annual economic contributions …the future of America’s maritime policy just might hang in the balance.”
The Jones Act (aka the Merchant Marine Act, 1921) requires that vessels sailing between U.S. ports must be U.S manned, U.S. constructed, and U.S. owned.
In June 2024, Jennifer Carpenter, President of the American Waterways Operators and the American Maritime Partnership, highlighted the importance of the Jones Act:
“The Merchant Marine Act — commonly known as the Jones Act — is vital to defending American interests and sovereignty … June marked the anniversary of this bedrock law and the founding of America’s Merchant Marine. These institutions enable our nation’s industrial base and naval power to safeguard global supply chains, preserve military readiness and protect our homeland security.
The Chinese Communist Party has long understood the importance of its maritime industry, funneling hundreds of billions of dollars in subsidies into its shipyards and shipping companies. China’s ambition to extend its influence and control over the global supply chain has had an immediate and pronounced effect … Meanwhile, the CCP has expanded its international presence into 100 ports globally and populated U.S. ports with cranes made in China, raising security concerns.
The Jones Act is fundamental to maintaining a fleet of American-built, -crewed and -owned vessels undergirding our nation’s economy and serving as a bulwark against China’s expansionism. It supports 650,000 American jobs, helps secure our domestic transportation from supply chain disruptions and buffers against anti-competitive maneuvers from China. U.S. shipyards are booked and busy building oceangoing and “brown water” vessels to meet our economic and national security demands.”
Heritage Criticism
The Heritage Foundation critique of the Jones Act is reflected in the following commentary:
“The Jones Act is not working and has never delivered a competitive edge. The United States has lost its global competitiveness in shipbuilding. China, on the other hand, has constructed a premier merchant fleet while investing in more than 100 ports in 63 countries. Under the Jones Act, the U.S. merchant marine cannot compete with large Chinese corporations such as COSCO. Conversely China’s “civ-mil” fusion harmonizes civilian shipping activities with military requirements. The Chinese are also not burdened with costly U.S. environmental, labor, and special interest regulations. The Jones Act and ad valorem taxes on U.S.-flagged vessels for overseas ship maintenance have prevented the U.S. shipping industry from competing globally and hastened its decline. The U.S. Jones Act-compliant fleet had 257 ships in 1980—and only 93 ships today.
Yet, the Jones Act makes it more expensive to maintain this fleet by requiring that these ships be U.S.-built, even while the withering fleet size has reduced U.S. capacity. The absurd consequence is that ships built in the U.S. now require maintenance in Chinese shipyards. This absurdity is compounded by the fact that the 93 remaining and aging U.S. ships would be of limited military use in wartime. Creating a wall of protection around the U.S. merchant navy has not worked, and the merchant fleet is in obvious decline as a result. This decline is in stark contrast to China’s fleet of 8,007 ships, the second largest fleet in the world by cargo-carrying tonnage. Chinese shipbuilders benefited from $132 billion in direct subsidies, as well as indirect subsidies and deregulation between 2010 and 2018. Yet, on the U.S. side, simply subsidizing a fleet that operates under the stifling Jones Act will not revive a declining U.S. merchant marine.”
The libertarian Cato Institute also supports repeal of the Jones Act and Cato’s Jones Act Reform project is led by research fellow Colin Grabow.
In a 2023 interview with AJOT, Grabow discussed the Cato Institute’s efforts to repeal the Jones Act: “It would be a sea change … I think we need dramatic change because things are in a bad state.”
High U.S. Shipbuilding Costs
In November, Melissa Newsham, a research associate at the Grassroot Institute of Hawaii wrote a critique of the Jones Act focusing on high U.S. shipbuilding costs:
“Shipping giant Matson, based in Hawaii, recently announced it is buying three new containerships from the Philly Shipyard in Pennsylvania for $1 billion — hundreds of millions of dollars higher than global prices.
But the company likely isn’t concerned much about the excessive price because its customers — mainly in Alaska, Hawaii and Guam — ultimately will be the ones to foot the bill, thanks to America’s protectionist maritime law known as the Jones Act, so its profits likely will remain strong.
The 104-year-old law quashes meaningful competition, both foreign and domestic, by requiring that all goods shipped between U.S. ports be on ships that are U.S. built, U.S. flagged and mostly American owned and crewed.
The law was intended to strengthen America’s maritime industry in the name of national security, but it has had the opposite effect — and American consumers are paying the price.
Matson’s news release about its capital outlay said the three vessels represent “an investment of approximately $1 billion” and will “match the size and speed of Matson’s two existing Aloha Class ships, Daniel K. Inouye, and Kamina Hila, which were also built by Philly Shipyard and entered service in 2018 and 2019, respectively.”
What the news release failed to mention is that the nearly identical Aloha Class ships built in 2018 and 2019 cost $209 million each at the time — compared to more than $333 million for each of the new vessels.
But even $209 million was vastly more than the prevailing world price. According to the Congressional Research Service (CRS), U.S.-built ships often come with a price tag at least four times higher than those built abroad.”
Life Without the Jones Act
While since the Jones Act’s inception the U.S. blue water merchant fleet has apart from wartime surges (World War 1 &2) rarely been a leading feature in the U.S. economy. Even now, with all the containership calls at U.S. ports, only a minimal few are U.S. flagged vessels. On the other hand, the “grey water” or inland and coastal fleet have grown significantly. This includes everything from Great Lakes shipping to operations in the Gulf of Mexico and in the future offshore wind operations. This begs the question of whether the U.S. blue water fleet would have been able to grow like other nations without significant subsidy programs? And would the inland and coastal fleets have been able to operate and grow without the Jones Act? In 2025 we might find out what life without the Jones Act could be.
