It’s hard to find a better example of a failed trade law than the Jones Act — which has now slashed US cargo-ship production to just a few vessels a year, while China’s building more than 4,000.
President Donald Trump and Congress need to prioritize a repeal of this 100-year-old protectionist legislation ASAP.
The law was supposed to boost the US merchant-marine industry by requiring that all shipping between US points use American-made, -owned, -crewed and -flagged vessels.
But sky-high US manufacturing costs, which are passed on to shippers and ultimately consumers, made other alternatives — e.g., imports, land-based transportation — far more economical.
The perverse result: Demand for US ships has plummeted, even as building costs soared.
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Shipyards have closed or become outdated; mariners are in short supply.
The entire Jones Act fleet now amounts to just 92 ships.
That means just 3.9% of domestic US freight is moved by sea, vs. 28% for the European Union.
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The law also raises the costs of ocean-shipped goods, with places like Puerto Rico, Hawaii and Alaska socked.
Indeed, the shortage of Liquified Natural Gas tankers that meet the Jones Act requirements is so severe that it’s actually cheaper for New England to import LNG from overseas than buy American — the exact opposite of what protectionism is supposed to achieve.
Fact is, the industry in America is nearly dead: Though the United States accounts for a quarter of the world’s economic output, it produces less than 1% its commercial shipbuilding.
Economists have long seen the law as a failure in terms of trade.
“We’ve had the Jones Act for a hundred years and through that entire time the rate of domestic shipbuilding has decreased decade over decade,” notes Jennifer Chen, of Balsa Research, which has tracked the data.
But it’s also proved dysfunctional in maintaining a robust shipbuilding capacity for national-security purposes.
The US military has even had to charter foreign ships to transport soldiers, equipment and supplies during conflicts.
Imagine if we needed to fight a prolonged war that required both combat and transport ships — and if, say, a blockade prevented delivery of foreign ships from allies overseas.
The Jones Act has been hurting American consumers and jobs and undermining national security for too long.
Oceans cover 70% of the Earth’s surface. We need to ramp our ship-building now.
Scuttle this outdated law already — and get the country back into ship-shape.
