NEW ORLEANS – The Trump administration on Aug. 10 announced a 90-day extension of the Jones Act waiver that allows some foreign-flagged vessels to carry cargo between U.S. ports, a trade normally reserved for American vessels. More than 200 such voyages have taken place since the waiver began in March, fueling debate over whether foreign vessels are filling gaps in U.S. shipping capacity or taking business from the domestic fleet.
The extension allows some foreign-flagged vessels to continue moving energy and agricultural products between U.S. ports while imposing new restrictions on their use. The American Petroleum Institute and other energy interests argue the additional vessels provide needed capacity and flexibility, while maritime and shipbuilding groups say allowing foreign competitors into domestic trade takes work from the U.S. fleet and weakens the industry over the long term.
Both sides say they want reliable energy supplies and a strong U.S. maritime sector but differ over how best to achieve those goals.
Waiver Extended With New Restrictions
The current waiver, set to expire Aug. 16, will be extended for 90 days beginning Aug. 17. Unlike the broader waiver currently in effect, the extension will require foreign-flagged voyages to undergo case-by-case review, with federal officials considering whether Jones Act-qualified vessels are available.
To qualify under the Jones Act, vessels carrying cargo between U.S. ports generally must be U.S.-built, U.S.-owned and U.S.-crewed.
Cato Says Waiver Exposes Gaps in U.S. Fleet
The Cato Institute, a Washington-based think tank that has long advocated reform or repeal of the Jones Act, argues that the waiver has exposed gaps in the domestic fleet and enabled commerce that the law otherwise would have prevented.
“Since March, the waiver has unleashed domestic commerce that the Jones Act previously prevented, with more than 54 million barrels of energy products moving between US ports on 200-plus voyages (and counting),” Cato scholars Colin Grabow and Scott Lincicome said in a joint statement.
Grabow and Lincicome said that in most cases, the voyages supplied U.S. companies with American energy products that otherwise would have been imported at higher cost or potentially not moved at all. They said the shipments also exposed gaps in the Jones Act fleet, including a lack of vessels appropriate for transporting bulk propane and asphalt, while allowing nearly 15 million barrels of energy products to reach the West Coast and increasing shipments of American propane to Puerto Rico.
“The waiver has given us a trove of real-world data showing some of the commerce that this protectionist law has blocked for more than a century, and this extension will give us even more,” they said. “But the fact remains that a temporary, product-specific waiver is just a band-aid, and its economic and security benefits would be dwarfed by those resulting from a broad, long-term reform (or even repeal) of the Jones Act’s protectionist provisions.”
Grabow and Lincicome said Congress should pursue permanent changes to the Jones Act.
Maritime Industry Opposes Extension
The American Waterways Operators, the national trade association representing the U.S. tugboat, towboat and barge industry, said it remains opposed to the waiver but welcomed changes to the extension, including a narrower range of covered commodities and consideration of whether Jones Act-qualified vessels are available.
“While AWO appreciates the dialogue with Administration officials that led to changes to this waiver – including the requirement that the Department of War consult with the Maritime Administration on the availability of Jones Act-qualified vessels and a narrowing of the scope of commodities covered by the waiver – we are deeply disappointed that the waiver has been extended when the public record over the last five months makes clear that the waiver has not been driven by military needs (the statutory standard), has not reduced the price of gasoline for U.S. consumers, and has allowed foreign vessels, including those linked to U.S. adversaries like China and Russia, to take work from Americans,” AWO said in an Aug. 10 statement.
The waiver was issued under a federal law allowing Jones Act requirements to be suspended when the Department of Defense determines the action is necessary in the interest of national defense to address an immediate adverse effect on military operations. Maritime groups have questioned whether commercial shipments under the waiver meet that standard.
AWO said it will work with the Trump administration and Congress to ensure individual requests to use the waiver are reviewed to determine whether they meet a national defense need that cannot be served by a qualified U.S. vessel.
“Our work is not over; it now moves into a different phase,” AWO said, adding that foreign vessels carrying cargo between U.S. ports should also be required to comply with applicable U.S. tax, immigration, labor and environmental laws.
