What is the Jones Act?

One week after the start of the Iran conflict, U.S. gas prices shot up more than 16%. That was the highest weekly price jump since the start of the Russia-Ukraine war, according to AAA.

President Donald Trump quickly said he’d found a way to make gas cheaper again. In March, he issued a 60-day waiver on the Jones Act, a law requiring goods traveling between U.S. ports to be carried on domestically built, owned, and operated ships.

Where did the Jones Act come from? Sen. Wesley Jones (R-Wash.) introduced the act in 1920 to stimulate U.S. shipbuilding capacity, which was strained during World War I. He told Congress the act would “put trade under the American flag” and support a domestic merchant marine. Other lawmakers countered that Jones was looking out for his constituency, which had maritime interests, at the expense of free trade.

How does the Jones Act affect oil ­supply? U.S.-built tankers can cost up to six times as much as similar ships built abroad, according to data from shipping analysis firm Marhelm. In 2024, the United States only had 92 Jones Act–compliant ships, and only 54 of those now carry oil.

Some have argued this has created a supply bottleneck, driving up prices for goods that are typically transported by sea and keeping the supply of those goods artificially low.

How could waiving the act lower gas prices? If cheaper foreign tankers enter the U.S. market, shipping costs for oil would fall. That would increase the supply of oil, especially in coastal cities, and put downward pressure on prices at the pump.

A 2023 study from the University of Chicago found that eliminating the Jones Act could bring gas prices down by 63 cents per gallon. Jet fuel could see even greater price reduction. U.S. consumer surplus—when buyers save money they would otherwise have spent—could top $760 million.

What do opponents say? Only about 2% of U.S. crude oil is moved by tanker. The majority travels through pipelines, so domestic shipping costs may add as little as 1 cent per gallon to overall gasoline prices, according to the Seafarers International Union. Others say the Jones Act waiver may signal low commitment to protecting U.S. interests at sea, risking national security.

The same University of Chicago study found that producer surplus—gains from selling above the minimum acceptable price—would fall by more than $360 million. That could put U.S. shipbuilders with high operating costs out of business, reducing the industry’s resilience to global disruptions and ­costing American jobs.

What other industries could be affected? White House press secretary Karoline Leavitt said the waiver will also bring down prices for fertilizer, natural gas, and coal. Some speculate the temporary waiver is a first step in eliminating the act, although any permanent change would require congressional approval. A repeal could cause ripple effects in other industries where legislation similar to the Jones Act applies, such as dredging, fishing, towing, and cruise shipping.