What to know about the Jones Act as Trump administration unveils 60-day waiver

NEW YORK (AP) — As the U.S. and Israel’s war against Iran continues to upend energy markets and supply chains around the world, the Trump administration says it will temporarily waive requirements for ocean shipping under a more than a century-old law known as the Jones Act.

The Jones Act requires that goods transported between U.S. ports be transported on U.S. flagged ships. Passed in 1920, the law aims to protect the American shipping sector — but it has also faced criticism over the years for slowing the delivery of goods, including vital aid during crises.

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The White House said Wednesday it would suspend Jones Act requirements for 60 days, an action that comes amid broader efforts to confront high oil prices and shipment disruptions caused by the war. The Jones Act is often blamed for making gas, in particular, more expensive. However, some analysts and industry groups say this waiver will do little to ease fuel bills for today’s consumers.

Here’s what we know.

What is Jones Act?

The official name of the Jones Act is the Commerce Marine Act of 1920. The law was passed by Congress — sponsored by Senator Wesley Jones of Washington state — in an attempt to rebuild American shipping after German submarines destroyed the American merchant fleet during World War I.

Among other things, the Jones Act stipulates that ships carrying cargo and passengers between U.S. ports must be built in the United States and owned by Americans — effectively banning foreign-flagged ships from such domestic trade. The ships must also carry American crews.

The US Maritime Administration notes that the law can be waived “in the interest of national defense,” either through the Department of Homeland Security or the Department of Defense.

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The Jones Act was also intended to ensure that the United States would have its own merchant fleet in the event of war. It has been strongly supported by some American shipping companies, national security advocates and organized labor. But the exclusion of foreign competition also drove up the cost of transporting goods domestically.

US-flagged ships are generally more expensive to operate and build than foreign ships. These costs particularly hurt states and territories that are supplied by sea, such as Hawaii and Puerto Rico.

Why would Trump waive Jones Act requirements now?

Oil prices have risen and fluctuated rapidly since the beginning of the Iran war. Almost all tanker traffic has stopped in the key Strait of Hormuz, prompting major oil producers across the Middle East to cut production. Commercial ships – which transport goods from medicines to computer chips, along with fuel – have also been stuck at sea or faced attacks themselves.

This results in higher prices for businesses and consumers around the world. Brent crude, the international standard, was trading at about $109 a barrel on Wednesday, up from about $70 before the war began. The price of US crude is now around $98 per barrel. American drivers have already seen prices at gas stations rise dramatically — the national average for regular gasoline topped $3.84 a gallon on Wednesday, per AAA, about 86 cents higher than before the war.
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All of this has countries scrambling for more supplies and alternative shipping methods. The White House confirmed last week that it was considering suspending the Jones Act requirements, which Trump described as “restrictive.”

White House press secretary Carolyn Leavitt said Wednesday that the Jones Act waiver would help “mitigate short-term disruptions to the oil market” during the Iran war and would allow “vital resources such as oil, natural gas, fertilizer, and coal to flow freely into U.S. ports.”

Meanwhile, the U.S. Maritime Partnership — a coalition representing ship owners, operators, unions, equipment yards and vendors — said in a statement that it is “deeply concerned” about the abuse of the 60-day waiver and the needless displacement of American workers and American companies.

The group, which has been a longtime supporter of the Jones Act, also reiterated that the measure would do little to lower gas prices for consumers.

How might the suspension of Jones Act requirements affect gas prices?

A number of factors contribute to prices at the pump. Many point out that opening domestic shipping routes is not a comprehensive solution.

The Center for American Progress estimated last week that waiving the Jones Act would lower East Coast gas prices by a modest 3 cents, but would likely raise costs on the Gulf Coast. The move “would also sideline American shipbuilders and workers and allow the oil industry to continue benefiting from high prices while reducing transportation costs,” the Center for Research and Policy said on Friday.

The United States is looking for additional ways to boost oil supplies. Also on Wednesday, the Treasury Department eased sanctions to allow US companies to do business with Venezuela’s state-owned oil and gas company. The Trump administration announced that it would temporarily free Russian oil from US sanctions as well.

Last week, the IEA also pledged to release 400 million barrels of oil from member states’ stockpiles, the largest volume of emergency oil withdrawals in the organization’s history. Trump, who has previously downplayed the need to tap reserve oil, confirmed that the United States will withdraw 172 million barrels from its strategic petroleum reserve over 120 days as part of the International Energy Agency’s efforts.

However, analysts stress that this will be a short-term bridge. Refiners also purchase crude oil in advance, and it takes time for new supplies to reach consumers. Of course, the pain of rising prices could increase further if the war continues.

The United States is a net exporter of oil, but that does not mean it is immune to global rises. Oil is a globally traded commodity. Most of what the United States produces is light, sweet crude, but refineries on the East and West coasts are designed primarily to process heavy, sour products. As a result, it also needs imports.

AP writers Seung-Min Kim, Paul Weissman and Colleen Binkley in Washington contributed to this report.