Passions Around the Jones Act: Efficiency Versus Security

On March 17, 2026, the U.S. administration, at the initiative of the Department of War (as the Pentagon is now called), suspended the Jones Act for the duration of the operation in Iran.

The Merchant Marine Act of 1920, better known as the Jones Act, was passed by the U.S. Congress on June 5, 1920. The law’s main purpose, as stated in its introductory provisions, was to create and maintain an American merchant fleet sufficient to meet the needs of national defense and to promote the foreign trade of the United States. The Jones Act is a federal law that defines measures to support the development and maintenance of the merchant marine to ensure commercial activity and to perform the functions of a naval auxiliary unit during war or a national emergency. Among other things, the law requires that transportation between U.S. ports be carried out by vessels sailing under the U.S. flag.

The suspension of the Jones Act (set to expire on August 16, 2026), introduced during the crisis in the Strait of Hormuz, was presented as an emergency measure for national defense and to reduce fuel prices. The repeal of the law shifted a significant portion of coastal shipping to foreign-flag vessels (including those of countries that are potential U.S. adversaries, above all China), but did not lead to any noticeable reduction in fuel prices.

Coastal shipments of oil and energy products increasingly began to be carried by foreign vessels, and the connection of this trend to the immediate military operation was not publicly explained. As of July 2, of the 145 shipments carried out under the waiver (about 34.1 million barrels in total), nearly a third were linked to China. About 30.3% involved vessels linked to China or Hong Kong through their registered owner, builder, or technical manager; 23.4% were built in China, and 11.0% were owned by Chinese or Hong Kong companies.

Why did the suspension of the Jones Act not lead to lower oil prices in the United States, as the law’s perennial liberal critics had assumed? Simply because the share of these transportation costs in the final consumer price of oil is negligible—literally just a few cents per gallon. Yes, foreign vessels reduced the cost of shipping on domestic routes. For example, shipping from Richmond to Los Angeles on a foreign vessel costs 2.4 cents per gallon less, while shipping from New Orleans to Port Everglades on a Jones Act vessel is 0.6 cents per gallon cheaper. These negligible differences did not result in any measurable decline in retail fuel prices in the country. If domestic maritime transport were the reason for high fuel costs, suspending the Jones Act would have lowered prices. That did not happen, because freight accounts for only a small fraction of delivery costs

Much greater pressure on these prices came from the global refined-products market, which was thrown into a surge of inflation expectations by the U.S. operation in the Gulf of Hormuz, as a result of which the benchmark refining margin rose from about $45 per barrel in early June to nearly $70 by mid-July.

Critics call the Jones Act a protectionist tax because, given the decline of American shipbuilding, a tanker built in the United States, according to data from the Congressional Research Service, can cost roughly four times the world price. But supporters of preserving and developing this strategically important industry believe that, for the sake of national security, it is necessary to support and subsidize domestic production and to keep the Jones Act in force, as it creates demand for domestic products. All the more so because on April 9, 2025, President Trump signed Executive Order (EO) 14269 “Restoring America’s Maritime Dominance,” which provides for the development of a Maritime Action Plan, and in February 2026 the corresponding ambitious strategic document—taking into account not only internal imperatives but also international realities and setting out targeted steps to revive the maritime fleet—was adopted. Therefore, national industrialists are perplexed by the contradictions both in the reasons for suspending the Jones Act and in the uncertain prospects for its reinstatement.

These American “squabbles” are directly related to the struggle between two defining doctrinal lines of economic policy—globalist and strategic. The first has long viewed the Jones Act as a relic of the era of protectionism—not even of the 20th century, but of the 19th—and emphasizes the commercial inefficiency of complying with it. But the second, strategic line urges thinking not in terms of current commercial categories, but incorporating this “rudimentary,” from the globalists’ point of view, law into the country’s long-term geoeconomic development strategy.