Should the Jones Act’s Requirement That Only American Ships Carry Goods Between U.S. Ports be Eliminated? (S. 1561)

What is S. 1561?

(Updated October 15, 2020)

This bill would repeal the Merchant Marine Act of 1920 — commonly known as the Jones Act — which requires that all vessels carrying cargo between U.S. ports be built, crewed, and owned by Americans. Failure to abide by the Jones Act exposes the company that delivers the goods to penalties which are based in part on the value of the transported goods, although waivers can be granted by the Dept. of Homeland Security in emergency situations or at the request of the Secretary of Defense for national security reasons.

Argument in favor

The Jones Act’s requirement that only American ships carry goods between U.S. ports is inefficient economically and raises shipping costs, which are ultimately passed to consumers in the form of higher prices. It should be repealed to make U.S. goods more competitive.

Argument opposed

The Jones Act may lead to higher prices for consumers, but it also a vital purpose by protecting the American shipping industry from competition in shipping goods between U.S. ports. That ensures the U.S. has the shipping capacity it needs for national security reasons.

Impact

Shipping companies; areas affected by the Jones Act like Alaska, Hawaii, and Puerto Rico; and the Dept. of Homeland Security.

Cost of S. 1561

A CBO cost estimate is unavailable.

Additional Info

In-Depth: Sponsoring Sen. John McCain (R-AZ) introduced this bill to repeal the Jones Act, which requires all goods shipped between ports of the U.S. be carried by vessels built in the U.S. and owned and operated by Americans:

“I have long advocated the repeal of the Jones Act, an archaic and burdensome law that hinders free trade, stifles the economy, and ultimately harms consumers. My legislation would eliminate this regulation, freeing American shippers from the requirement that they act against their own business interests. By allowing U.S. shippers to purchase affordable foreign-made carriers, this legislation would reduce shipping costs, make American farmers and businesses more competitive in the global marketplace, and bring down the cost of goods and services for American consumers. The protectionist mentality embodied by the Jones Act directly contradicts the lessons we have learned about the benefits of a free and open market. Free trade expands economic growth, creates jobs, and lowers costs for consumers.”

Media:

• Sponsoring Sen. John McCain (R-AZ) Press Release
  
• Countable
  
• Heritage Foundation (In Favor - Previous Version)
  
• Government Accountability Office (Context)