Trump Administration Proposes Jones Act Waiver for Fuel and Fertilizer

The White House has floated the possibility of waiving the Jones Act for coastwise fuel and fertilizer transport, and U.S. maritime industry associations warn that foreign-flag competition would do little to address near-term price concerns - and could damage the health of the domestic fleet.

"In the interest of national defense, the White House is considering waiving the Jones Act for a limited period of time to ensure vital energy products and agricultural necessities are flowing freely to U.S. ports," White House spokeswoman Karoline Leavitt said in a statement Thursday, noting that the decision to had not been finalized.

The waiver would conflict with the administration's fleet-revival and immigrant-labor policies, but it is a tool that presidents often consider when looking for urgent options to stabilize gasoline prices. At present, with the Strait of Hormuz shut down and Brent crude prices hovering around the $100-per-barrel mark, U.S. retail gas prices are averaging in the range of $3.60 at the pump - up about $0.70 in less than a month. The White House is taking exceptional steps to counteract the price increase: this week it drove through a global plan to release a record 400 million barrels of oil from strategic reserves, including 170 million barrels from the U.S. supply.

Little-noticed in the White House's statement, a parallel Jones Act waiver for "agricultural necessities" could also address transport prices for fertilizer. The cost of agricultural inputs, especially urea, has also been driven high by the disruption to Arabian Gulf trade lanes - just ahead of the North American planting season.

Industry associations warn that a waiver sends the wrong message to workers and investors in American maritime.

"Waiving the Jones Act in an attempt to address raising fuel prices won’t work and it will jeopardize American jobs, U.S. tax revenue, and the future of the American maritime industry," said Aaron Smith, President of the Offshore Marine Services Association (OMSA) in a statement. "Anytime the Jones Act is waived, it sends a signal to companies considering investments in U.S. vessels, shipyards, and the American workforce., If the goal is to strengthen America’s maritime capability and supply chain resilience, policymakers should be reinforcing that foundation, not weakening confidence in it."

"Waiving the Jones Act would do nothing to reduce gasoline prices. In fact, the primary driver of gasoline prices is the cost of crude oil, not domestic shipping costs. Several studies have shown the impact of domestic shipping on nationwide fuel prices is negligible, and any marginal savings would be unlikely to reach consumers," said a coalition of seven maritime unions, including MM&P, MEBA and the SIU. "A Jones Act waiver would instead create opportunities for foreign-flag operators that avoid paying U.S. taxes, rely heavily on low-wage labor, and operate under regulatory regimes that circumvent international labor and vessel safety standards in direct conflict of America’s national security and economic interests."

If formalized, the waiver would be the second time that the Trump administration has prioritized the immediate needs of the broader economy over its long-term plans to restore American shipping. Last year, after China exercised its leverage over the availability of rare-earth mineral supplies in an attempt to extract trade concessions, the administration suspended its plan to charge steep port fees to China-linked ships - a fee schedule disliked by Beijing. On its side of the deal, China suspended a plan to closely meter out its rare-earth exports to foreign buyers, including U.S. defense manufacturers.