Key Takeaways
President Trump has issued a 60-day waiver of the Jones Act.
By restricting coastwise trade to U.S.-built, U.S.-owned, U.S.-flagged, and primarily U.S.-crewed ships, the law artificially limits the available supply of vessels capable of moving goods between American ports.
This reduced competition drives up shipping costs substantially compared to what would prevail in an open, international market, where operators could draw from a vastly larger global fleet of more affordably built and operated ships.
Suspending the Jones Act for a period of time will prove beneficial, as it would allow foreign vessels to transport oil, gasoline, coal, natural gas, and other products between American ports. This is especially relevant for energy markets as the Jones Act has impeded domestic shipping from the Gulf of America to the East Coast, California, and to non-contiguous parts of the country, such as Puerto Rico.
The Jones Act is a domestic maritime shipping law that requires all ships engaged in domestic waterborne trade in the United States to be registered under the American flag and to be American-manufactured, owned, and crewed. At its core, the Act was established for national security, to create and maintain a fleet of auxiliary vessels to support the Navy during times of war. Furthermore, because it was enacted immediately after World War I, the Jones Act was also intended to ensure that the United States would not be reliant on foreign markets for its shipping industry, including vessel construction. Today, supporters of the Jones Act argue that it is still vital for national security as it doesn’t place the U.S. in a vulnerable position of being reliant on foreign vessels, while opponents contest that it does nothing more than force the American people to rely on older vessels, increasing shipping costs, and limiting domestic transportation options.
As a result of the ongoing Iran War and the subsequent impact on supply chains and the global energy market, President Trump has issued a 60-day waiver of the law. With the intention stated by White House press secretary, Karoline Leavitte, being for the allowance of “vital resources like oil, natural gas, fertilizer, and coal to flow freely to U.S. ports for sixty days,” taking the action of pausing the Jones Act during a time of crisis demonstrates the modern reality that it no longer serves its intended purpose and would in fact, permanently lower both shipping costs and the price of American energy if it were permanently repealed.
Cause for the Suspension
Beginning on February 28th, 2026, with Operation Epic Fury, the 2026 Iran War has seen Iran directly target regional energy infrastructure in a manner outside its historical playbook. As a result of the ongoing conflict, shipments through the Strait of Hormuz have essentially come to a halt. For example, reports indicate that only approximately 77 ships crossed the Strait between March 1 and March 11, compared with 1,229 that sailed through during the same period last year. With the majority of them likely being part of what is also known as the “shadow fleet,” which ships sanctioned oil to countries such as China, the world is experiencing an energy crisis since upwards of 20% of the global supply of crude oil and liquified natural gas (LNG) regularly transits through the Strait of Hormuz. The cost of the halt in energy shipments through the Strait of Hormuz is beginning to be felt severely worldwide. Even though the United States is fortunate to be insulated from the physical war itself, rising oil prices will affect the entire economy, as oil is an input in the production and transportation of everything.
The most straightforward economic consequence of the Jones Act is its exclusion of foreign-flagged vessels from the domestic maritime shipping market. By restricting coastwise trade to U.S.-built, U.S.-owned, U.S.-flagged, and primarily U.S.-crewed ships, the law artificially limits the available supply of vessels capable of moving goods between American ports. This reduced competition drives up shipping costs substantially compared to what would prevail in an open, international market, where operators could draw from a vastly larger global fleet of more affordably built and operated ships. Jones Act-compliant vessels often face construction costs several times higher and significantly elevated daily operating expenses. These inflated transportation expenses are inevitably passed along the supply chain, ultimately raising prices for consumers on a wide range of goods, from energy products like gasoline and diesel to everyday items.
Suspending the Jones Act for a period of time will prove beneficial, as it would allow foreign vessels to transport oil, gasoline, coal, natural gas, and other products between American ports. This is especially relevant for energy markets as the Jones Act has impeded domestic shipping from the Gulf of America to the East Coast, California, and to non-contiguous parts of the country, such as Puerto Rico. This will lead to slightly lower gas prices, with the greatest impact being noticed in California, Hawaii, Alaska, and Puerto Rico, while also reflecting slightly lower prices for natural gas for places like New York, Massachusetts, and New Jersey, as these locations have limited supply options given the shipping restrictions of the Jones Act and the existence of only so many pipelines.
A Temporary Pause Should be Permanent
Waivers for the Jones Act have been issued in the past, especially during times of crisis, such as in 2017 for disaster relief after hurricanes Harvey and Irma, which made it easier to ship gasoline and diesel to affected areas, including Puerto Rico and Florida. While these waivers do provide relief by expanding transportation options, they also raise a glaring question: why not repeal the law entirely to allow goods to flow via seaborne shipping in a freer market, not just during times of crisis?
Although the intention of insulating America’s shipping industry was to close vulnerabilities arising from reliance on foreign partners, the unintended consequences have been higher transportation costs, leading to a smaller fleet and higher operating costs compared with foreign vessels. For example, it is estimated that the cost of building an American coastal-sized ship can be between eight and ten times that of some foreign competitors, at $190-$250 million compared to $25-$30 million. Additionally, crewing costs are higher for American vessels, accounting for 68% of expenditures, whereas for their foreign counterparts, they account for 35% of annual operating costs. Furthermore, it was estimated that in 2018, operating a U.S.-flagged vessel was $6.2-$6.5 million more expensive than operating a foreign-flagged vessel. These higher costs in a heavily insulated domestic market have also led to a diminished fleet of reliably operable vessels, with only 93 of 190 privately owned U.S.-flagged merchant vessels classified as “Jones Act Eligible” as of January 2026.
Conclusion
The war in the Middle East has led to a halt in half of the shipping through the Strait of Hormuz. One of the world’s most important transit routes and critical chokepoints, its shipments through the Strait regularly account for one-fifth of the world’s supply of oil and LNG. As a result of the decrease in energy shipments from the region, gas prices, which are tied to the global oil price, have begun to rise steadily worldwide. The Trump administration has issued a 60-day pause on the Jones Act, which requires that all domestic shipping in the United States be carried by American-manufactured, American-flagged, American-owned, and American-crewed vessels. Although this will not be a cure-all for rising gasoline prices, it will lower transportation costs for goods shipped domestically.
