President Trump’s tariffs, no matter what form they take, are unclear what impact they will have on US manufacturing, and will likely take place over several years. Hopefully they will be driving the manufacturing renaissance where the Trump administration is giving birth to banks. But one surefire way to boost our manufacturing bases right away is to reduce the cost of two inputs, which are key for all manufacturers. Whether the selected widget is a sophisticated car or as humble as a paper clip, all manufactured goods use both energy and transportation.
Much has already been done to reduce energy costs with the Trump administration’s “Drill Baby Drill” mantra. So far, transport, the other half of the equation, has received little attention. This is a shame. American companies spent in 2023 Over $1.5 trillion Transport components only in logistics equations, more than 5% of GDP. When you buy lettuce at a supermarket, you buy it via an online service or through a bottle of bourbon at a liquor store, you buy it through transport. Transportation is an embedded purchase that no one really cares about. Except that teeth cost. What you can do to reduce business costs will make American manufacturers more competitive. (Related: Democrat Governor says he agrees with Trump on the manufacturing end goals)
If Congress and the Trump administration want an easy way to make American manufacturers more competitive, a good place to see is the 1920 reform of the Merchant Law of the Sea, known as the Jones Act. The Jones Act requires that companies engaged in maritime commerce between US ports must be US-owned and that at least 75% of US citizens or permanent residents can only be used by crew members.
Current rationale To continue the restrictions on Jones Act, the Act is to ensure that reliable US fleets and shipbuilding capabilities will be available for national security purposes. It is also supposed to ensure that the United States maintains a properly trained merchant navy. However, various studies have shown that this is not true. 2019 Cato Institute Report, “Rust Bucket: How Jones’ Actions Damage to U.S. Shipbuilding and National Security” It showed that of the 281 Ready Reserve Forces (RFF) and commercial vessels charted by the Military Sealift Command during the first Gulf War, only eight people compliant with the Jones ACT. Not surprisingly, Jones’ actions were so low that it was hard to find American Marina.
The United States does not get national security benefits from Jones Act, but it acts as a barrier to US commercial. It simply requires that ships operating between US ports be built at US shipyards, which is too expensive to simply operate. Ships built in US shipyards are often Four times World price.
Naturally, this all means that the Gulf, Atlantic and Pacific oceans are dramatically exploited resources. a study The Mercatus Center found that only 2% of US domestic cargo was transported by sea, compared to about 40% of European Union countries. The Bay, the Atlantic, the Pacific – they are very large resources that are not used.
All Americans are losing due to the Jones Act, but Alaska, Hawaii, the Virgin Islands and Puerto Rico are the most intense hits. None of these states/territories are available to access the US by pipelines, railroads or trucks, and therefore must rely on expensive air freight or Oligocoly Jones Act carriers. For example, some estimates cost a lot Double It will ship to Puerto Rico, as well as the nearby Dominican Republic.
Submitted by one Hawaiian shipper Litigation He argues that Jones law explicitly discriminates against Hawaii. And the Alaska Legislature introduced SJR 11. This urges the US Congress to enact a Jones exemption that allows domestic liquefied natural gas (LNG) transport between Alaska ports. There is There are no LNG tankers Meets the requirements of the Jones Act. As a result, Alaska is able to export a wealth of natural gas, but it cannot ship it for domestic purposes.
Hawaii and Alaska are two obvious examples of Jones doing economic harm. However, the biggest negative outcome is likely something we don’t see. When railroads, trucks and airlines were deregulated in the late 1970s and early 1980s, economic benefits were not just low freight rates that followed. The final round of deregulation led to new ways of doing business and helped position the US economy due to the boom of the 1980s.
The Jones Act has been in place for over 100 years to succeed, but it is a dramatic failure on both national security and economic grounds. In 100 years, we can safely say that it is not a conduit to the dynamic marine deployment industry and will never happen. It’s time for reform to help reinvigorate the US economy.
David M. Ozgo is executive director of the Transportation Progress Center and founder of Advocacy Analytics, LLC.
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