The Obscure Law That Keeps Your Energy More Expensive Than It Has To Be

Most people have never heard of the century-old shipping law President Donald Trump temporarily suspended for the second time last month to ease fuel costs and stabilize supply chains during the Iran war. 

The law, known as the Jones Act, was signed by President Woodrow Wilson and requires that goods transported between U.S. ports be carried on ships that are American-built, American-owned, and American-crewed. The legislation was designed to rebuild America’s shipping industry after German U-boats decimated America’s merchant fleet during World War I. 

Trump initially waived the act for 60 days and then extended the waiver another 90 on May 18. Taylor Rogers, a spokeswoman for the Trump administration, said, “The waiver extension provides both certainty and stability for the U.S. and global economies.”

The American maritime shipping industry “is a total failure,” said associate director at the Cato Institute’s Herbert A. Stiefel Center for Trade Policy Studies Colin Grabow. “I think we need to move on from it.”

Grabow is an advocate for permanently repealing the law Trump has temporarily put on ice. He says it has long distorted the market and driven up costs for American consumers: “U.S.-built ships cost about five times more than those built overseas. They cost about four times more to operate. There aren’t a lot of them. So this adds up to some very costly shipping.”

Due to the cost and limited number of vessels (there are only 93 Jones Act-compliant ships in existence), less than 4% of domestic freight is shipped by water, compared to 67% by truck, 20% by pipeline, and 6% by rail. The 4% via water moves goods from the continental United States to Hawaii, Guam, Alaska, and Puerto Rico. The Grassroot Institute of Hawaii estimates the Jones Act costs the average Hawaii family about $1,800 a year and the state economy $1.2 billion a year.

Despite promises the Jones Act would bolster American ship manufacturing, that hasn’t come to fruition. In 1960 there were 2,926 American-built ships, but that number declined 94% to just 188 ships in 2025.

The waiver immediately drew backlash from protectionist industry groups, who argue it undermines the American shipping industry. “We are deeply concerned about this 60-day, broad waiver being abused and unnecessarily displacing American workers and American companies,” the American Maritime Partnership said in a statement.

The group dismissed the Trump administration’s claims that the policy would meaningfully lower gas prices, arguing the impact would be less than one cent per gallon. But critics of the Jones Act say that misses the bigger picture. 

Americans for Free Markets executive director David Ibsen told The Daily Wire he welcomes the change, and the positive impacts should be long-term. “It’s telling that whenever there is a national emergency, presidents from both parties move quickly to waive this outdated and unnecessary law,” he said. “If it’s so clear that the direct impact of the Jones Act is higher costs for energy and consumer goods, then there is little reason to keep it. It should be permanently waived or repealed.”

Former Presidents George W. Bush and Barack Obama waived the act after Hurricane Katrina (2005) and Hurricane Sandy (2012) to quickly move fuel and supplies to affected areas. Beyond natural disasters, Ibsen suggests that permanently waiving the act could reduce the amount of money flowing to America’s foreign adversaries by making it cheaper to buy American natural gas.

“The Jones Act restrictions on shipping between U.S. ports means certain regions of the country are forced to import natural gas from foreign countries, including Russia,” he argued. “It’s absurd and harms both American energy producers and consumers.”

Permanently repealing the Jones Act, which would require Congress, would conflict with Trump’s broader protectionist economic project. Instead of restricting foreign competition, it would invite it by allowing cheaper, foreign-built and foreign-crewed ships to operate in domestic routes.