U.S. President Donald Trump is considering another suspension of the Jones Act as gasoline prices above $4 a gallon threaten to become a liability for Republicans heading into the midterm elections. This move would once again allow domestic oil and fuel shipments to be transported by cheaper foreign-flagged vessels, extending an emergency waiver that Trump imposed after the Iran conflict sent crude prices sharply higher in March.
The issue is that the initial waiver had a minimal impact on gasoline prices. Shipping costs represent only a small fraction of what consumers pay at the pump, leaving Trump with limited options to reduce prices through maritime policy, even as he intensifies pressure on ExxonMobil and Chevron over their soaring profits.
Concurrently, Trump has increased pressure on Big Oil regarding high gasoline prices, criticizing Exxon Mobil (NYSE:XOM) and Chevron (NYSE:CVX) for excessive profits amidst high energy prices and global supply shortages. Trump has instructed the Department of Justice to investigate Big Oil for potential price gouging, accusing oil companies of maintaining high gasoline prices even as global crude prices have declined.
This backlash followed the companies' strong second-quarter financial results, with Chevron's quarterly earnings surging to $12 billion, up from $2.5 billion the previous year, while ExxonMobil's profits more than doubled to $14.5 billion.
Given that Big Oil has shown no signs of complying with Trump's threats, extending the Jones Act waiver is another option for the White House. The initial 60-day exemption, announced in March after oil prices spiked in the early weeks of the Middle East conflict, is scheduled to expire on August 16. By temporarily suspending the law's stringent maritime restrictions, the White House has permitted foreign-flagged vessels to transport oil and refined petroleum products between U.S. ports.
The Jones Act is a federal law stipulating that all cargo transported between U.S. ports must be carried on ships that are built in the U.S., owned by American citizens, and primarily crewed by U.S. workers. It has been waived 40 times in its 105-year history. Former U.S. President Joe Biden also waived it in 2021 following the Colonial Pipeline ransomware attack.
The primary objective of the Jones Act is to ensure a consistent supply of American-owned and operated commercial vessels available to support national defense and logistics during wartime or national emergencies. It also safeguards employment for U.S. mariners and shipyard workers by eliminating cheap foreign competition on domestic shipping routes.
Interestingly, some are advocating for Trump to abolish the Jones Act entirely. In a March Bloomberg Opinion piece, former New York City Mayor Michael Bloomberg argued that the temporary waiver of the Jones Act during the conflict with Iran demonstrated that the 1920 shipping law is an outdated and counterproductive protectionist measure. Bloomberg described the law as "one of the most counterproductive protectionist measures of the last century," highlighting that its artificial inefficiencies unfairly penalize American consumers, costing typical families in isolated regions like Hawaii approximately $1,800 annually. He noted that the suspension helped to moderate fuel prices and support domestic shipments without harming the broader industry, making a case for Congress to permanently repeal or relax the act.
However, while the energy and agricultural sectors support the waiver for its role in bypassing supply bottlenecks, Trump faces opposition to suspending the federal shipping law, including from members of his own party. Maritime industry critics warn that it jeopardizes American shipbuilding and domestic seafaring jobs.
In June, House Speaker Mike Johnson and over 50 Republican lawmakers sent a letter to the president urging him to allow the Jones Act waiver to expire as originally scheduled, arguing that it undermines American maritime jobs and national security. Data from the waiver period indicated that approximately 95% of the waiver voyages were handled by foreign operators, prompting domestic maritime groups and congressional leaders to push for a return to standard protectionist rules. Meanwhile, Senator Maria Cantwell and other critics contend that the Jones Act waiver has failed to lower fuel prices while creating uncertainty and instability for the U.S. maritime and shipbuilding sectors.
And the Washington senator has a valid point. Previously, we reported that the suspension of the Jones Act in March did little to lower oil prices. "It is estimated that it’s going to be about 3 cents on the East Coast and it might go up on the Gulf Coast, but these changes are so small that they’re overshadowed by the spikes in oil prices, and the oil prices keep going up," Usha Haley, a professor of management at Wichita State University, told Al Jazeera about a month after Trump suspended the Jones Act.
The political pressure to reduce gasoline prices will only intensify as the midterm elections approach. A late-July Politico poll found that 46% of respondents stated that gas prices would influence their voting decisions this fall.
