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Lower Inflation by Repealing the Jones Act

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Published February 28, 2023

The Jones Act is a federal law that requires all goods transported by water between US ports to be carried on vessels built, owned, and operated by Americans. In practice, it benefits the domestic shipping industry at the expense of consumers. Repealing the Jones Act would reduce energy costs and help offset inflation.

Discussion Questions:

  1. Is there an argument for why the Jones Act shouldn’t be repealed? 
  2. Does the Jones Act have any effect other than increasing the cost of shipping?

Additional Resources:

  • Read “Waive the Jones Act to Get the Supply Chain Flowing Again,” by Kevin Hassett and Timothy Fitzgerald via theWall Street Journal. Available here.
  • Read “The Ten Steps of Stagflation,” by Kevin Hassett via National Review. Available here.
  • Watch “Fiscal Policy and Inflation,” with John Cochrane. Available here.
View Transcript

As politicians look for ways to lower inflation, there is one option that could help alleviate prices: Repealing the Jones Act.

The Jones Act requires that any ships operating between ports within the U.S. must be constructed in the States and owned and operated by American citizens or permanent residents.

Foreign ships can arrive at U.S. cities but are prohibited from traveling to another American port without first visiting a foreign port.

In practice it means that Boston gets its natural gas in the winter from Russia, not from Louisiana or Texas, because there aren’t any US-made ships that can transport liquid natural gas.

Imagine if individual states only allowed trucks that were built and run by their residents to deliver goods within their borders. Trade between states would grind to a halt, raising the costs of goods for consumers in each state. The Jones Act does the same thing with ships and countries instead of trucks and states.

By artificially restraining supply, the cost of everything that is transported by sea is made more expensive. 
Unfortunately, the shipping industry reaps large benefits from the law. It contributes millions of dollars to politicians in both parties to prevent the Jones Act from being waived or repealed. 

But while the shipping industry reaps some benefits, the harm to consumers is much larger.  

Repealing the Jones Act would mean faster and cheaper shipping, and lower prices for consumers.