Senator Mike Lee (R-UT) has introduced a bill that would repeal the Jones Act, a 1920 shipping law that requires all goods moved between two US ports to be US-owned, US-built, US-crewed, and US-registered. It was intended to protect the American shipbuilding industry, but over the course of decades, it has backfired immensely.
America’s shipbuilding industry accounts for just .04 percent of the global shipbuilding industry. For context, the United States accounts for roughly a quarter of the world’s GDP. The Jones Act has all but destroyed America’s shipbuilding industry.
Fewer than 100 Jones Act-compliant ships exist because they cost at least triple what comparable foreign-made ships cost to build. As a result, Jones Act ships tend to be older and smaller than other ships. Shipping rates on Jones Act ships are similarly expensive and can’t compete outside the protected US market. The only business some US shipbuilders can get is from government contracts.
That’s bad news for a shipping industry that could thrive if regulators allowed it to compete in a free market like other industries. The Jones Act also has harmful spillover effects on the rest of the economy, especially in places that are difficult to access, such as Alaska and Hawaii, and for goods that are more difficult to transport, such as liquefied natural gas (LNG).
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