President Biden briefly suspended one of the world’s trade protectionist policies last week, providing temporary economic relief to the people of Puerto Rico in the aftermath of Hurricane Fiona.
The Jones Act, a century-old law that prevents the shipment of cargo between U.S. ports, is an unjust prohibition that raises costs for just about everyone and should be waived permanently.
The Jones Act’s protectionism affects all of us, including a farmer like me in landlocked Iowa: The ethanol produced from my corn can’t travel by water to people on the east coast. I’d love to see it float down the Mississippi River. Instead, it must move by rail or truck, which are more expensive modes of transportation. This means that motorists in Boston and Philadelphia are paying an additional fee for their gas—all because of this antiquated and anti-competitive law.
The Jones Act, as Dominic Pino of National Review recently explained, “says that any ship delivering goods between two U.S. ports must be built in the U.S., flagged in the U.S., owned by Americans, and operated by American crewmen.” It was passed in the wake of World War I to maintain a vigorous merchant-marine service, as a matter of national security.
Maybe it made sense back then. Today, however, the Jones Act hurts national security because it has led to the wildest absurdities. Rather than buying their natural gas from oil-producing Americans, for example, New Englanders, in the past, have imported it from Russia. Who can blame them? It was cheaper that way because of the Jones Act. But it doesn’t make anyone safer.
What’s more, the Jones Act has decimated American shipyards, which no longer build oceangoing commercial vessels.
Every American pays a price for this act of protectionism, but the Jones Act absolutely brutalizes Alaskans, Hawaiians, and Puerto Ricans, who, by virtue of where they are located, are most reliant on waterborne transportation. The Grassroot Institute of Hawaii, a free-market think tank, estimates that the average Hawaiian family pays an extra $1,800 a year for consumer goods, due to this protectionist law.
These costs are invisible to us: They represent a hidden tax on every American.
Sometimes, though, we catch a glimpse of the damage when a natural disaster exposes the manmade disaster of the Jones Act.
As they suffered, a ship off the coast carried 300,000 barrels of diesel fuel. It flew the flag of the Marshall Islands. That means that if it had sailed from Saudi Arabia, it could have docked and delivered its load to the people who desperately needed it. Because it sailed from Texas, however, the Jones Act banned it from entering one of Puerto Rico’s ports.
Under the rules of the Jones Act, the president possesses emergency powers to waive the law’s restrictions. The Biden administration wisely exercised this option and allowed the fuel-filled ship to provide Puerto Rico with a small amount of relief. Five years ago, the Trump administration did much the same thing after Hurricane Maria smashed its way across the island.
Yet the Jones Act never fades away. It always returns to its full strength, to the detriment of almost everyone.
Some lawmakers are now calling for Puerto Rico to enjoy a broad and long-lasting waiver. They point out that people of Puerto Rico, which is not a state but whose residents are U.S. citizens, are already poor—and that the Jones Act makes them even poorer. Rep. Alexandria Ocasio-Cortez, a Democrat from New York, has made the case on Twitter: “We must lift the Jones Act, which has exploited Puerto Rican consumers and strangled the economy.”
The full truth is that the Jones Act exploits us all—the United States should lead by example and eliminate one of the world’s worst examples of protectionism and unleash the power of free trade.