The Jones Act: Protectionism Weakens Security
- Mar 3
- 5 min read
By Neo Gaitan '25
Introduction
What began as a way to protect the maritime industry during World War I has become the instrument of the United States’ downfall in maritime security. (1) The Merchant Marine Act of 1920, also known as the Jones Act, is the foundation for regulating the shipbuilding industry, but at its core, it is a hindrance to the United States’ capabilities to compete within the shipbuilding industry. (2) At the heart of the Jones Act are its three key requirements for merchant ships: ships transporting cargo from two U.S. points must be U.S.-built,-owned, and crewed by U.S. citizens. (3) These measures were meant to ensure a strong merchant marine to support America’s commerce and the nation’s preparedness for war and national emergency. By requiring U.S. construction, the law aimed to preserve a domestic shipbuilding industry that could rapidly expand vessel production during wartime. The U.S. ownership and crewing requirements were designed to guarantee a pool of trained American mariners and vessels that could be called upon to transport military equipment and supplies in times of crisis, as had been necessary during World War I. Additionally, maintaining this maritime infrastructure was seen as essential for economic security, ensuring that critical goods could move between American ports without dependence on foreign-flagged vessels that might become unavailable during international conflicts or political tensions.
However, in protecting our maritime industry, it has done the exact opposite and neutered our competitive edge against other nations. Now, China accounts for 53.3% of the global shipbuilding market. And the U.S.? A mere 0.1% of the industry. (4) Therefore, a century of the Jones Act has showcased that protectionism has produced results antithetical to its national security objectives. By shrinking the domestic shipbuilding base to irrelevance, the United States lost the industrial capacity needed to build vessels during wartime. Meanwhile, this lack of competitiveness has ceded maritime dominance to China, controlling the infrastructure and expertise needed to project naval power and secure supply chains during conflicts, the very capacities the Jones Act was meant to preserve.
Wartime Necessities
The ascension of the Jones Act dates back to the start of World War I (WWI). (5) After Congress declared war on Germany in June 1917, the United States chartered fourteen merchant ships to set sail to aid Europe. (6) While these ships served as the lifeline for the American fleet across the Atlantic, eleven of these ships were involved in coastal trade, creating a deficit of ships for the U.S. and requiring greater reliance on its allies for help. (7) This formulated the creation of the Emergency Fleet Corporation, which oversaw the manufacturing of 2,318 ships and an extra 122 ships at the end of WWI. (8) This surplus of ships led to a new maritime dominance that allowed the U.S. to exert power on the rest of the world. (9)
Thanks to the advocacy by Senator Wesley Jones (R-WA), the Jones Act was passed through Congress. (10) The act's main highlight is Section 27 (Section 29 previously) to reserve the coast-wise and intercoastal trade to US-flag vessels built in the United States and owned by American citizens. (11) This law aimed to utilize the United States' new fleet for international trade routes and put American companies at the forefront of this growth. By shielding the surplus of ships the U.S. garnered during and after the war, the outcome was a strengthened merchant marine operation that the U.S. controlled. As President Woodrow Wilson stated, “it is hereby declared to be the policy of the United States to do whatever may be necessary to develop and encourage the maintenance of such a merchant marine.” (12)
Postwar Necessities
However, the landscape has changed. Section 27 now harms business, consumers, and taxpayers by spending billions of dollars to subsidize US shipbuilders. (13) These subsidies artificially prop up an uncompetitive industry that lacks the scale and efficiency of foreign shipyards—U.S. vessels can cost four to five times more to build than comparable ships constructed abroad. Rather than fostering genuine competitiveness, the subsidies enable higher prices by shielding domestic builders from market pressures, while the limited number of qualified U.S. shipyards further restricts supply and drives up costs. As of these requirements laid out by the Jones Act, it’s now more expensive to build U.S. vessels, which in turn restricts competition and ultimately hurts the U.S. economy overall. When it comes to transportation, the Jones Act has diverted moving goods to rail and trucks, raising costs that transporting in ships would not have created. (14)
Additionally, it has subverted the building of US-flagged ships to foreign builders. In 2024, out of 185 flagged US ships, 93 were foreign-built, while 92 were Jones Act-approved. The former provides a stable demand for cargo ships, negating the need for Jones Act-approved ships, while the latter provides stipends to ships that participate in cargo preference laws. (15) Thus, we have a fleet split in half, one half only able to transport goods between US ports and the other half benefiting from a lack of competition in the US shipbuilding market. (16) Although these foreign-built ships can’t participate in transportation between U.S. ports, they benefit from cargo preference laws set by the Maritime Security Program. (17)
Therefore, in the need to protect our fleet for U.S. security, the exact opposite has happened. The maritime security the Jones Act was built to shield has ultimately weakened the United States. What we have now is a fleet that is economically inefficient and foreign ships benefitting from what the Jones Act was supposed to defend against in the first place.
Conclusion
The economic and security deficiency of the Jones Act has sparked calls for action on the pitfalls of Section 27. This law, like many other areas of law (e.g., antitrust), has far overstayed its welcome and needs to be reformed. By adjusting the U.S.-built law to allow ships to be made overseas, the cost of shipbuilding would be lower and benefit both businesses and consumers. Certain national security measures and legal standards must be implemented in order to meet the standards of U.S. interests. But, by repealing 1 of the 3 requirements in Section 27 of the Jones Act, the United States would move in a direction where the Jones Act was meant to take us.
Endnotes
William Olney, “Cabotage Sabotage? The Curious Case of the Jones Act*,” 2019. https://web.williams.edu/Economics/wp/Olney_JonesAct.pdf.
Ibid.
Ibid.
Congressional Research Service, “Shipping under the Jones Act: Legislative and Regulatory Background,” November 21, 2019. https://www.congress.gov/crs_external_products/R/PDF/R45725/R45725.5.pdf.
Matthew Funaiole, Brian Hart, and Aidan Powers-Riggs, “Ship Wars Confronting China’s Dual-Use Shipbuilding Empire a Report of the Hidden Reach Special Initiative,” 2025. https://csis-website-prod.s3.amazonaws.com/s3fs-public/2025-03/250311_Funaiole_Ship_Wars.pdf?VersionId=rr_4IH5jXertgzLdS.ke07oFmgWTHnIM.
Joe Lantow and David Working, “The Jones Act: American Industrial Protectionism at Its Crummies,” Zachary Scott, December 17, 2024. https://zacharyscott.com/the-jones-act-american-industrial-protectionism-at-its-crummiest/.
Salvatore Mercogliano, “A Century of the Jones Act,” seahistory.org, n.d. https://seahistory.org/wp-content/uploads/SH169_Feature_Jones_Act.pdf.
Ibid.
Ibid.
Ibid.
Ibid.
Ibid.
Ibid.
Theo Knights, “The Jones Act Doesn’t Support US Military Shipbuilders,” American Enterprise Institute - AEI, May 6, 2019. https://www.aei.org/economics/the-jones-act-doesnt-support-us-military-shipbuilders/.
Ibid; Caleb Petitt, “The Jones Act Arguably Cuts the U.S. Ship Fleet in Half: News Article - Independent Institute,” Independent Institute, August 5, 2025. https://www.independent.org/article/2025/08/02/jones-act-shipping-regulations/.
Ibid.
Ibid.
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