Time To Sink The Jones Act

By Louis Garguilo, Chief Editor, Outsourced Pharma

It may have taken a modern-day war to finally get us here. A war very much involved with the free navigation of commercial shipping.

After more than 100 years navigating a policy of protectionism – and frankly, fear of competition – are we finally on the cusp of eliminating the Jones Act?

The Trump administration is considering temporarily waiving the Act in response to rising oil prices and potential shortages tied to the current conflict with Iran.

Waiving the Act would allow foreign-owned tankers to move oil between U.S. ports — something that is, quite unbelievably, unlawful today.

But let’s not temporarily waive it. Let’s sink the Jones Act forever.

I’ve visited this law in editorials examining the competitiveness of U.S. biopharma manufacturing locations, and specifically as related to Puerto Rico in our supply chains. In those discussions, the Jones Act surfaced as a long-standing policy distorting the economics of supply across multiple industries.

So what exactly is the Jones Act?

A Law From Another Era

The Jones Act is shorthand for Section 27 of the Merchant Marine Act of 1920.

It stipulates that between U.S. ports commerce can only be transported aboard ships built in the U.S.; owned by U.S. companies and “flagged” U.S.; and crewed primarily by American citizens.

Congress passed the law in the aftermath of World War I, when the United States determined it lacked sufficient merchant ships to support wartime logistics and trade.

Policymakers decided the country needed a stronger domestic shipbuilding industry to serve both commerce and national defense; they believed this law would bolster ship building.

By most all accounts, they were wrong. Instead, we got higher shipping costs, and mostly lost our industry anyways: the number of large, private U.S. shipyards has fallen from 64 post-WWII to three today.

Nonetheless, supporters of the Jones Act still make essentially the same arguments today as 100 years ago.

Modern justifications for the Act center on national and homeland security, arguing it maintains a (small) U.S.-flagged fleet and a skilled shipyard industrial base necessary for national defense – despite the high costs. Proponents still argue it prevents reliance on foreign vessels for domestic trade and provides U.S. jobs.

Listen, these are not trivial goals or concerns.

But a century later, the uncomfortable truth is the Jones Act has not nearly achieved its promised outcomes.

Instead, shipbuilding migrated first to Japan in the postwar decades, and then to South Korea (and other Asian economies). Even under protectionism, global shipbuilding followed the same forces that shape every industrial sector: productivity, costs, scale, and innovation.

Have we not learned that protectionism does not stop this process?

 The Jones Act didn’t preserve American shipbuilding leadership. More likely, it helped ensure commercial shipbuilding within the U.S. would shrink and grow less competitive.

Compounding the problem are the unintended consequences of any law limiting the free flow of commerce in your own country. All kinds of industries suffer negative effects, very much including pharmaceutical manufacturing. 

The Puerto Rico Example

Nowhere is this clearer than in Puerto Rico—an island historically important to our drug industry.

As I wrote when examining the island’s role in previous U.S. reshoring discussions, “Puerto Rico produces the most pharmaceutical products for export of any U.S. state or territory,” and the island remains a significant pharmaceutical production hub in the United States.

Amgen, Bristol Myers Squibb, Eli Lilly, and Pfizer among others operate major facilities there. Last year, Lilly announced “a more than $1.2 billion investment in Puerto Rico to boost oral medicine manufacturing capacity in the United States.”

Then there is all the contract manufacturing that goes on.

Despite this record, Puerto Rico is hamstrung because it lives directly under the economic reality of the Jones Act, because the island is treated as a domestic port under U.S. law; cargo shipped from the mainland must travel on Jones Act vessels.

That dramatically limits available shipping capacity, raises costs, and directly impairs the U.S. biopharma manufacturing ecosystem.

From an earlier editorial: “Perhaps the most serious supply-chain challenges we face are due to transportation – not manufacturing – disruption.” 

Biopharma And The Cost Of Friction

The biopharma industry has always understood materials and manufacturing are part of a global supply chain ecosystem.

Raw and starting materials may originate in one part of the world, specialized equipment arrives from another, active pharmaceutical ingredients (APIs) are produced elsewhere, and final products are finished and distributed throughout the United States and global markets.

Constraints on transportation waste time and money. For industries dependent on reliable logistics, e.g., pharmaceuticals and chemicals, agriculture, or energy, which is driving today’s renewed debate, the Jones Act is a tax and constraint.

Which brings us back to the current moment.

Now, when another geopolitical conflict threatens oil supplies, policymakers rediscover the limitations imposed by the Jones Act. In fact, waivers have been issued after hurricanes, natural disasters, and other emergencies precisely because the law slows the movement of essential goods.

Much to his credit in this specific regard, President Trump is asking if the U.S. should again temporarily suspend the Jones Act?

The more honest question is why in 2026 do we keep reinstating it once a crisis has passed?

Time To Jump Ship

None of this means American maritime workers, or national security, are less unimportant; far from it.

But protecting workers should not at the same time mean permanently restricting a key element of our national economy.

Industries grow stronger through innovation and productivity, and yes, competition – even for military applications. Century-old barriers shielding sectors from global competition have never worked.

In an era when policymakers urge companies to reshore pharmaceutical manufacturing and strengthen domestic supply chains, maintaining artificial barriers to shipping between U.S. ports works directly against that goal.

Wow much more efficient would our domestic sponsors, CDMOs and other suppliers be without ropes around the shipment of materials between U.S. ports?  

Perhaps the Jones Act made sense in 1920. It sure does not in 2026.

Here’s for sinking it once and for all.