Op-Ed: The Jones Act Waiver, A Gift to China and NATO’s Iran Onlookers

When Iran closed the Strait of Hormuz, the Administration had a real problem on its hands. I understand why a White House would want to move fast, but moving fast and moving smart are not the same thing. This week the Administration extended the current Jones Act waiver for another 90 days. Washington needs to take an honest look at what this waiver has actually produced.

The U.S. Maritime Administration (MARAD), which oversees the nation’s merchant fleet, has data that tells the story. Of the fifteen voyages completed under the current waiver, a clear majority have gone to maritime companies based in Greece, Denmark, Sweden, and the United Kingdom. Those are the same NATO allies that declined to support U.S. operations to reopen the Strait of Hormuz, the very crisis the waiver was issued to address. They would not help move American warfighters. But they have been plenty eager to move idle foreign fleets into American domestic trades, displacing American vessels and American mariners. Foreign operators who pay no federal or state taxes and do not comply with U.S. immigration laws now enjoy a built-in cost advantage in American waters. The waiver was marketed as a defense measure. In practice it has rewarded the allies who sat out the fight. 

Look closer and the picture gets worse.

Four of those fifteen vessels were built in Chinese shipyards. Ten of the owner operators behind them have direct Chinese connections. The same policy that bypassed American yards to address a defense concern has put Chinese-built tonnage and Chinese-linked operators into the very trades the Jones Act was written to protect. China has made its shipbuilding ambitions explicit. They control a dominant share of global commercial shipbuilding, and they are not shy about the connection between commercial capacity and naval readiness. When American shipbuilding shrinks and Chinese tonnage moves into American trades, China does not simply gain market share. It gains strategic leverage. Every waiver is a subsidy to that ambition, paid for by American workers in American yards, including the more than 400 men and women who show up at my family’s yard in Coden, Alabama every day.

Most policymakers have the wrong picture of American shipbuilding in their heads. It is not a handful of large prime defense contractors. According to MARAD, 154 private shipyards operate as active builders across 29 states and the U.S. Virgin Islands, with another 300-plus repair facilities. The majority are family-owned for generations, anchored in towns along the Gulf Coast, the Great Lakes, the Pacific Northwest, and the Eastern Seaboard. They build the workboats, tugs, and barges that move the commerce of this country every day. They are frequently the largest private employers in their communities, supporting machinists, welders, electricians, and engineers. When a waiver makes it marginally cheaper to move freight on a foreign-flagged vessel, the damage compounds over time and falls hardest on yards without the scale to absorb it, undermining a hardworking American workforce in favor of foreign labor held to very different standards.

Foreign capital sees what some in Washington refuse to see. American maritime infrastructure is worth owning, and the Jones Act is a significant part of what makes it worth owning. Meanwhile, a major U.S. maritime investment platform that has placed hundreds of millions of dollars into American shipyards has paused a planned $1 billion capital raise intended for new Jones Act tonnage. That pause is a direct response to the uncertainty this waiver has created. The same Administration that asked institutional capital to back American shipbuilding through its Maritime Action Plan is now giving that capital a reason to pull back. Confidence, once paused, is expensive to restart.

Here is what frustrates me most. US law already has a better tool. Section 501(a), the authority the Administration used for the current waiver and extension, lets a single agency issue a sweeping waiver on defense grounds alone, with no requirement to examine whether American capacity actually exists. Section 501(b) is different. It requires the Secretary of Homeland Security, in consultation with the Maritime Administrator, to find that qualified U.S.-flag capacity is unavailable before any waiver is issued. That puts the people who actually know the American fleet in the room. MARAD knows what we have. Customs and Border Protection knows what is moving through our ports. The result is a waiver narrowly tailored to the specific defense need, not a blanket that throws open more than 600 categories of merchandise to foreign-flag competition. A 501(b) waiver would have addressed Hormuz without rewarding the allies who sat it out, without putting Chinese-built tonnage into American domestic trades, and without pausing a billion dollars of capital that was about to flow into American yards.

The waiver has not brought down energy prices. Prices have gone up in every U.S. market since it was issued. What it has done is push American energy products overseas at higher world prices and inject uncertainty into an industry that runs on long investment cycles. A 90-day extension does not soften that signal. It hardens it.

Washington can do better, and the statute already provides the narrower tool. The Jones Act is the floor of an American industrial policy that has never been more relevant. Treat the law that sustains American shipbuilders and our maritime fleet like it still matters.

 

Garrett Rice is President of Master Boat Builders, based in Coden, Alabama, and Vice Chair of the Shipbuilders Council of America.