Jones Act Waiver Pushback Grows

President Donald Trump’s defense-related waiver to the Jones Act that allows foreign-flagged ships to temporarily move cargoes between U.S. ports is set to expire on August 16. As the deadline approaches, the chorus of those opposed to the waiver is getting louder and more determined. It was originally supposed to expire in mid-May, but the president extended it to the current deadline. Reuters reports that top White House officials are debating whether and how to extend it further.

The original justification for the waiver was to relieve gas prices. So far, there is zero evidence that the waivers have had any noticeable impacts on gas prices at the pump.

That doesn’t mean there has been no benefit to the oil companies and refiners, however. The waivers have allowed them to use cheaper foreign-flagged vessels to bring in crude oil, which they then refine and sell on international markets, pocketing the savings themselves.

By how much have the waivers increased oil companies’ profits? Firm figures are disputed and hard to separate out, but oil majors declared quarterly earnings from April to June that were roughly triple those from the previous quarter. The savings from the waiver are added to the windfall oil companies are already getting from high oil prices due to conflict.

More disturbingly, those foreign vessels moving goods between American ports are often linked to China. According to data from American Maritime Partnership and Navigistics Consulting, about 18% of waiver voyages were performed by vessels linked to Chinese entities, while U.S.-built, owned and crewed vessels remained available.

Several sources have reported that a Chinese-owned tanker, Jin Zhou Wan, has carried asphalt from Harvey, La., to Baltimore at least twice. The asphalt tanker was built in 2017 and is owned and operated by COSCO Shipping Asphalt Hainan, a subsidiary of the state-owned China COSCO Shipping Corporation.

Critics are questioning why a Chinese-owned vessel is being allowed to conduct domestic trade under an emergency national security exemption. China COSCO Shipping Corporation has appeared on Department of Defense lists identifying Chinese military-linked companies operating in the United States.

On June 30, 52 members of Congress — largely Trump’s allies on other issues — sent the president a letter urging that the waiver be allowed to expire this time. House Speaker Mike Johnson, echoing leading maritime voices, argues that the 150-day waiver is already undermining the president’s stated goal of rebuilding and reviving U.S. shipbuilding., also articulated in the SHIPS for America Act.

In a recent letter to the Washington Post, Jenifer Carpenter, president and CEO of America’s Maritime Partnership, wrote, “If Congress wants to address refinery closures, fuel markets or regional supply challenges that have hurt America’s energy dominance, it should do so directly. But the Jones Act waiver has shown that the maritime industry is not a driver of gas prices. All it has demonstrated is that without the Jones Act, vessels built in China, crewed by underpaid mariners, flying flags of small countries to dodge taxes and regulations, can and will undermine investment and growth in an all-American industry.”

To see the letter from members of Congress to the president, visit https://tinyurl.com/WJ-JonesActWaivers.