President Donald Trump made the right call on Friday when he extended a waiver of the Jones Act for 90 days. But the move deserves only two cheers, because the waiver itself has been severely watered down, undermining its effectiveness. The original waiver’s initial benefits to trade were so apparent that the case for scuppering the law itself has never been stronger.
The 106-year-old Jones Act requires goods traveling between U.S. ports to move on vessels that are U.S.-built, U.S.-owned, U.S.-flagged and U.S.-crewed. When war with Iran sent energy prices soaring, the Trump administration broadly relaxed those restrictions in March.
What followed was a successful free-market experiment. Foreign vessels completed hundreds of voyages that otherwise would have been illegal. The White House says the waiver has enabled an additional 90 million barrels of petroleum to move between American ports, including 27 million barrels of gasoline and 26 million barrels of crude oil.
But now government is back in the way. Under pressure from the domestic maritime industry, the Trump administration narrowed the waiver in August, replacing the broad exemption with case-by-case reviews. That bad feature remains in Friday’s extension. Before using a foreign vessel, a shipper must ask the government for permission. The Maritime Administration checks whether an eligible American vessel is available, and the Pentagon decides whether the proposed voyage qualifies.
Traffic slowed to a trickle after that change. Only nine energy cargoes moved on foreign-flagged vessels after Aug. 17 through early October, compared with more than 280 voyages during the preceding five months. “The preclearance process itself is slow and unwieldy,” Bloomberg News reported last month, “and frequent denials have led some companies to abandon pursuing approvals.”
The American Maritime Partnership — a coalition of domestic vessel operators, shipbuilders, repair yards, maritime unions and other industry interests — mounted a six-figure ad campaign urging Trump to end the waiver and lobbied the White House to let it expire. The group praised the administration for narrowing the waiver in August. After Trump extended the waiver on Friday, the trade group immediately urged the administration to “continue scrutinizing all waiver requests under the case-by-case process.”
This is crony capitalism on the high seas. When a well-connected industry is taking on water, politicians keep competitors away and make consumers pay to keep it afloat. If an American vessel can move a product more efficiently than a foreign competitor, it should win the business. If it can’t, Washington shouldn’t rig the market in its favor.
More than a century of protection has not produced U.S. maritime dominance. Only a tiny fraction of the world’s roughly 7,500 oil tankers satisfy Jones Act requirements. A National Bureau of Economic Research study estimated that repealing the law would save American consumers $769 million a year on petroleum products and crude oil.
Americans shouldn’t need a war, a waiver and a bureaucrat’s blessing to buy goods from other Americans. Congress should rename the law the Davy Jones Act and send this shipwreck to the bottom of the sea.
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