By Steve G. Parsons, Ph.D. I spent most of my career working in regulated industries.  This work included efforts to reduce regulation and/or make regulation more economically efficient.  My work involved U.S. federal regulations as well as state regulations in most states in the U.S. as well as regulatory work in other countries.  I have published in the Yale Journal on Regulation, the Journal of Regulatory Economics, and the Administrative Law Review among others.

Corporate Welfare and Federal Corporatism. Before discussing traditional regulations, I want to begin with Corporate Welfare and Federal Corporatism. Corporate Welfare in the Federal budget hit $181 billion in 2025.  It takes the form of grants, loans, tax breaks and other subsidies and constraints on trade.  These have increased over time with three laws having the biggest impact: 1) Infrastructure Investment and Jobs Act of 2021; 2) Chips and Science Act of 2022; and 3) the so-called Inflation Reduction Act of 2022. Corporate Welfare in the Federal Budget | Cato Institute.

Bailouts that began with the Troubled Asset Relief Program (TARP) during the financial crisis of the late 2000s laid the groundwork for the government to take equity stakes in private companies today. The Trump administration’s rapid embrace of “state corporatism” is exemplified by US government direct equity stakes in 12 private firms often with the government as the largest shareholder.  This has routinely been accompanied by at the very least the appearance of state coercion: Equity stakes followed government officials’ threats to reject a foreign acquisition (U.S. Steel), agitate public opposition to management (Intel), or ban the export of certain products unless the state gets its cut (Nvidia). The Conspicuous Fist of Trump's State Corporatism | Cato Institute

Corporate welfare and federal corporatism are the antithesis of free enterprise and innovation.  They abandon the principles that made the US the world’s most prosperous country and undisputed technological leader.  These policies should be more at home in China or Cuba, not the US.

See also: Trump equity stakes pose these risks to U.S. companies and markets; Trump's New Era of Capitalism: How Equity Stakes Will Reshape Economy - Business Insider; Your Tax Dollars Are Funding Trump’s Biggest Tech Investments | Built In; The Push Toward State-directed Capitalism Undermines Market Competition - AAFThere has also been an alarming increase in Federal Corporatism.‍ ‍

The Costs of Regulation. Regulation can create a substantial drag on business and the economy in total. Consider two studies on this topic discussed by the free-market oriented Mercatus Center. First, a now 12-year-old study found “that the accumulation of rules over the past several decades has slowed economic growth, amounting to an estimated $4 trillion loss in US GDP in 2012 (had regulations stayed at 1980 levels). See, d regulations stayed at 1980 levels)” (Regulatory Accumulation and Its Costs | Mercatus Center; and (Government Regulation: New Numerical Measure Ranks States |National Review). I estimate a 2024 value is nearly $7 trillion. This means fewer goods and services and higher prices; eliminating these regulations would be like having paychecks about 25% bigger. The accumulated effect would be even greater if we pushed regulations back in time before 1980. “A study published in Journal of Economic Growth in 2013 finds that between 1949 and 2005 the accumulation of federal regulations slowed US economic growth and had the amount of regulation remained at its 1949 level, 2011 GDP would have been about $39 trillion—or 3.5 times—higher than it was.” ((Regulatory Accumulation and Its Costs | Mercatus Center).

There are currently over 1 million federal regulations or constraints (US Federal Regulation Tracker (quantgov.org).  However, the total state regulations (across all states) are far greater.   Among the states, “the least regulated state is South Dakota, with about 44,000 regulatory restrictions, while the most regulated state is California, with 395,000.” (Government Regulation: New Numerical Measure Ranks States | National Review.) Navigating the Regulatory Labyrinth – Insights from NAM and CEI Reports

Sugar Subsidies - An Example. The US sugar industry is dominated by import restrictions, subsidies and quotas. Because of these policies US sugar prices are approximately double those in the rest of the world. This has led to a loss of between 17,000 and 20,000 jobs in food processing. It has also triggered the use of High Fructose Corn Syrup (HFCS) in US foods; HCFC is banned in some countries due to links to obesity, diabetes, heart disease and liver disease. Over the last two decades US sugar subsidies have ranged from 40% to 60% of total revenues. This higher than any country on earth - except for Communist China. And like China the US establishes quotas telling each company how much sugar they can produce. The largest 1% of farms plant about 25% of sugar cane/beets. This is the very antithesis of free enterprise and efficiency. The US should eliminate US sugar subsidies and quotas and leave such policies to communist countries.

References: The Sticky and Sickly(?) Price of America’s Sugar Subsidy | American Council on Science and Health; The negative and detrimental effects of high fructose on the liver, with special reference to metabolic disorders - PMC; America’s Addiction to Big Sugar Leaves a Bitter Aftertaste | The Heritage Foundation;

Biofuel Policies - A More Costly Example. The US provides a variety of subsidies to the biofuel industry and it imposes mandates for biofuel use levels, sources, and technologies (via the “Renewable Fuels Standard” RFS). The costs to comply with the RFS will be $67 billion in 2026 and rising thereafter. 40% of the US corn crop goes to biofuel; we force Americans to pump the equivalent of nearly 16 billion meals of corn into our gas tanks. As the best cropland is increasingly used for biofuel, the costs of food for Americans rise. In addition, since ethanol and other biofuels only has 2/3 of the energy of gasoline, MPG drops and the real price of gasoline rises. For example, the “effective” price of soy-based biodiesel is about $7.25/gallon. And while biofuel policy was intended to be “green”, the United Nations Food and Agriculture Organization found that pushing noncropland to corn for ethanol 17 times more emissions than the emissions “reduced.” The RFS and US biofuel policies should be eliminated; leave the choice of fuels up to companies and consumers.

References: The sobering truth about corn ethanol - PMC U.S. policy promoting biofuels may have worsened climate change, study finds | Yale Environment Review; EPRINC-Chart2023-22-USBiodieselCosts-Version2.pdf; Industry Compliance Costs Under the Renewable Fuel Standard: Evidence from Compliance Credits | Review of Industrial Organization | Springer Nature Link; Will the ‘26-‘27 RFS ‘unleash’ affordable, reliable energy? | American Fuel & Petrochemical Manufacturers

The Jones Act of 1920 - An Example of Costly and Antiquated Regulation.

Section 2y of the Merchant marine Act of 1920 (commonly called the Jones Act) requires that “no ship can transport any cargo between two United States ports unless it demonstrates that: 1) the company owning it is comprised of at least 75% of U.S. citizens; 2) the transporting vessel was not built or re-built in a foreign country; 3) at least 75% of the crew are U.S. citizens.” (P.L. 66-261 (41 Stat. 988) The Cost of the Jones Act Also Extends to the U.S. | Business | theweeklyjournal.com). 

The Act was signed into law by Democratic “progressive” two-term President Woodrow Wilson. His legacy was one of protectionism and rampant federal spending (which increased by 920% between 1912 and 1920 and by 2,680% between 1912 and 1919) with similar increases in the national debt (US federal budget history (areppim.com)).  In my opinion, he was among the worst of the U.S. presidents; the Jones Act is part of his legacy. 

While many countries have restrictions on shipping by foreign vessels (called cabotage), “according to the World Economic Forum, the Jones Act provides the world’s most restrictive example of global cabotage laws.” (Washington International Trade Association, 2018.  The Jones Act: A Burden America Can No Longer Bear - WITA).  And by any measure the US is among the three nations with the most restrictive domestic shipping laws in the world. 

Increased Costs of Ship Building and Shipping.  The burden of the Jones Act has increased over time as thousands of regulations have been heaped onto the related industries.  Estimates suggest that the cost differential was 20% in 1922, 50% in the 1930s, 100% by the 1950s, 200% by the 1990s.  Today, the price of a U.S.-built tanker or container ship is four or five times that of global prices (Journal of Commerce, “Drewry: Repeal the Jones Act,” November 18, 2013).   

These purchase price differentials lead to higher shipping costs for U.S. companies.  In 2017 the American Enterprise Institute found: “[f]or example, it costs about three times more to ship oil from the Gulf Coast to New England states than to ship the same amount of oil to Europe.” ((Meet the Jones Act | American Enterprise Institute - AEI ).  Consider a January 2024 article from the Cato Institute: “In 2022, for example, three 3,600 TEU containerships were ordered from a US shipyard for $333 millioneach. The previous year, meanwhile, the going price for an even larger (4,250 TEU) containership from a foreign shipyard was $65.5 million.” (US Protectionism and Chinese Shipyards Keep Aging Ships Sailing | Cato at Liberty Blog.).  Even without adjusting for their smaller capacity the U.S. ships cost five times as much as their international counterparts. 

Older Ships.  These purchase price differentials are consistent with US ships being much older than their international counterparts (because replacement cost is so much higher).  A Jones Act CEO stated that “tankers from the international fleet are typically used for 20 to 25 years” (20–25 years). In contrast “[t]he last seventeen ships removed from the Jones Act fleet had an average age of forty-three.” (US Protectionism and Chinese Shipyards Keep Aging Ships Sailing | Cato at Liberty Blog) Citing average age of forty‐​three).  

Declines in U.S. Shipbuilding and Shipping. The high cost of Jones Act vessels is also consistent with the decline of domestic ship building in the U.S.  “U.S. shipyards capable of building large oceangoing commercial ships have dwindled from 30 in 1953 to just four as of November 2021, and oceangoing Jones Act ships have declined in number from 257 in 1980 to just 96 … less than 1% of all commercial oceangoing vessels worldwide.” ( Merchant Fleets of the World Privately-Owned, Oceangoing Merchant Vessels of 1,000 Gross Tons and Over as of January 1, 2016,). But this actually overstates U.S. shipbuilding capability which is now at only 0.13% of the world ship building capability (The United States Must Improve Its Shipbuilding Capacity | Proceedings - February 2024 Vol. 150/2/1,452 (usni.org)).  As an example, the U.S. has no LNG tankers of size to transport gas in bulk. 

s economics would predict, there have been substantial declines in U.S. domestic shipping via water, falling by 50% since 1960 while trucking volumes increased substantially.   

Five Categories of Cost Caused by the Jones Act.  The costs of the Jones Act fall into five categories.  First, as noted above, the costs of businesses shipping goods by water from one US port to another are substantially higher than they would be if the Act were repealed.   Second, The Jones Act causes Americans to import more goods since the cost of American goods. This is due to the artificially higher prices of American goods caused by increased domestic shipping costs. This level of imports is higher than efficient.

Third, this cost differential leads to international shipping (using less costly vessels) over longer routes (rather than domestic shipping).  Obviously, such circuitous routing is inefficient and costly to the U.S.  Indeed, this is a contributing factor for why the US simultaneously imports and exports the same goods such as rice (USDA ERS - Chart Detail), potatoes (Potatoes: U.S. import and export value 2022 | Statista)), lumber (Forest Products | United States International Trade Commission (usitc.gov)), and petroleum ((Lee, McClintock Introduce Jones Act Repeal Bill | Cato at Liberty Blog)).  

Fourth, the direct cost of trucking (or shipping by rail) domestic freight is higher than non-Jones Act ships in many circumstances.  Fifth, the high costs of Jones Act shipping cause a greater volume of ground transport via trucking (and to a lesser extent rail).  This creates additional costs associated with infrastructure, congestion, pollution, and safety. 

National Security? Many who oppose repeal of the Jones Act claim there are national security reasons to pay substantially higher costs and retain the Act.  I find this argument doesn’t hold water for several reasons. 

Indeed, in March 2026 “"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," Trump weighs Jones Act waiver amid rising fuel prices, White House says

‍U.S. is only 0.13% to 0.04% of World Shipbuilding Capacity.  First, the Jones Act fleet is tiny – we have a shortage of mariners, less than 1% of the world’s commercial vessel capacity and only 0.13% of the world’s commercial shipbuilding capability (U.S. Navy Secretary Looks to Asia to Revive Shipbuilding at Home (gcaptain.com)) - while the US has 24% of the world GDP.  Indeed, in 2024 US shipbuilding represented 0.04% of the world total. If the Jones Act did what it purported to do – the U.S. fleet would be much larger and much younger.  Naval wargames don’t even include Jones Act ships so as to not “uncover the economic liability of the coastal-wise trade for the purposes of American support.” (Colin Grabow on X: "Head of @US_TRANSCOM in congressional testimony on Tuesday: wargaming reveals that we wouldn’t really count on the Jones Act fleet for sealift needs. https://t.co/WqZSAZ7CKB" / X (twitter.com)).  That is, Transcom doesn’t count on Jones Act ships in an emergency, like they do for the civil reserve aviation fleet. 

‍Inexpensive Ships from South Korea or Japan Without Delays.  Second, U.S. shippers could (with even a partial repeal of the Jones Act) purchase much less expensive ships from our allies such as South Korea or Japan.  In April 2024 U.S. Navy Secretary Carlos Del Toro was “floored” by the efficiency of the South Korean ship building capabilities; U.S. shipbuilding has severe delays and cost overruns (US Navy secretary says he was 'floored' by a Pacific ally's shipbuilding abilities amid American warship production woes (msn.com)).  While not my first choice, the Jones Act could be modified (rather than fully repealed) to allow the purchase of foreign vessels to be owned and operated by U.S. companies. 

‍Alternatively, we could allow our allies’ flag ships to transport goods between U.S. ports at a fraction of the cost of continued use of Jones Act ships. 

‍Not State of the Art. Third, as noted above, “[m]uch of the commercial fleet is relatively old, raising safety concerns in certain cases.” (Shipping Under the Jones Act: Legislative and Regulatory Background (congress.gov)).  It is impossible to have such older ships be as reliable as their younger, state-of-the-art international counterparts.  If the merchant fleet were large enough to provide meaningful support, this would be a national security issue. 

‍Maintenance in China by Jones Act Ships. Fourth, “Jones Act shipping companies regularly make use of shipyards outside the United States for repairs, maintenance, and upgrades of their vessels, including facilities in China (Creaking Jones Act Ships Turn to Chinese Shipyards for Maintenance Needs | Cato at Liberty Blog.). It is nonsensical to prohibit the use of ships built by one of our allies such as South Korea (where we have approximately 28,500 troops stationed) for US domestic shipping, but Jones Act ships can be repaired in China. 

SHIPS Act. Despite the fact that some shipbuilding subsidies have existed at local levels for decades and at the federal level since the 1930s, this act adds more subsidies. In addition, the US simply does not have the skilled labor to increase shipbuilding. If we produced more commercial ships - construction of military ships would bear the burden of the lack of manpower. Also, half the components needed for US shipbuilding are imported and subject to tariffs.

It is noteworthy that on March 18, 2026, President Trump provided a 60-day waiver to the Jones Act that “will allow vital resources like oil, natural gas, fertilizer, and coal to flow freely to U.S. ports for sixty days,” White House press secretary Karoline Leavitt said. The logical outgrowth is the permanent waiver to the Jones Act.

A Response on SHIPS for America Act | Cato Institute; Shipbuilding: Colin Grabow of the Cato Institute brings the free-market viewpoint;

Jones Act Conclusion. According to the Cato Institute: “Contrasting the Jones Act’s stated objectives with observable results, the law is revealed to be a national security failure. With dwindling numbers of ships, mariners, and shipyards, the U.S. military’s ability to leverage these civilian assets during times of war has been deeply compromised.” (Rust Buckets: How the Jones Act Undermines U.S. Shipbuilding and National Security | Cato Institute). 

‍Advice to avoid or repeal the Jones Act and reduce inflation was given in 1919 (Shipping Under the Jones Act: Legislative and Regulatory Background (congress.gov)) and by noted economists (such as Milton Friedman) in a conference on inflation in 1974 (The Economists Conference on Inflation - Google Drive).  That advice has been oft repeated since.  The US can improve efficiency and reduce the costs of shipping goods and services within the US and hence reduce inflation.  This can be done without national security concerns; this can be done simply by repealing the Jones Act of 1920.  Better late than never, no matter how much water is under the bridge.

‍Additional Jone Act References:  ‍

Strait of Hormuz Energy Crisis Offers Another Reason to Repeal the Jones Act | American Enterprise Institute - AEI

Congressional Research: Service Shipping Under the Jones Act: Legislative and Regulatory Background Updated November 21, 2019 Shipping Under the Jones Act: Legislative and Regulatory Background (congress.gov).

‍John W. Dawson and John J. Seater, “Federal Regulation and Aggregate Economic Growth,” Journal of Economic Growth 12, no. 2 (2013): 137–77. (Dawson & Seater 2013).‍ ‍

The Economist, Apr 11th 2022. What is the Jones Act, the century-old law pushing up prices in America? (economist.com).‍ ‍

The Federalist Society, 2019: Is It Time to Repeal the Jones Act? [POLICYbrief] | The Federalist Society (fedsoc.org)‍ ‍

Forbes October 5, 2021: A Law That Deserves To Hit An Iceberg (forbes.com)‍ ‍

A Response on SHIPS for America Act | Cato Institute‍ ‍

Shipbuilding: Colin Grabow of the Cato Institute brings the free-market viewpoint

Patrick A. McLaughlin and Oliver Sherouse, RegData US 3.1 Annual (dataset), QuantGov, Mercatus Center at George Mason University, Arlington, VA, 2018.)‍ ‍

The Mecatus Center, May 2, 2017: An Economic Analysis of the Jones Act | Mercatus Center‍ ‍

National Taxpayers Union, July 2021: The Act that Ate Reasonably Priced Ocean Shipping - Foundation - National Taxpayers Union (ntu.org)‍ ‍

News is My Business, Feb. 2019: MIDA: Jones Act has ‘devastating effects’ on P.R. economy, with losses of up to $1.5B – News is My Business‍ ‍

Organization for Economic Cooperation and Development (OECD) Science, Technology and Industry Policy Papers April 2019: Local content requirements and their economic effect on shipbuilding: A quantitative assessment | READ online (oecd-ilibrary.org)‍ ‍

Thomas Jefferson Institute for Public Policy, May 2024 The Jones Act: A Hidden Cost to Farmers - Thomas Jefferson Institute for Public Policy‍ ‍

USDA Economic Research Service USDA ERS - Chart Detail‍ ‍

U.S. Forest Service, 1986: Impacts of the Jones Act on the Alaska forest products trade. | US Forest Service Research and Development (usda.gov)‍ ‍

U.S. House Committee on the Merchant Marine and Fisheries, Protection of United States Coastwise Trade, 66th Congress, 1st Sess. H.Rept. 135, part 2, Minority Report, July 22, 1919‍ ‍

U.S. Maritime Administration, Jan. 1, 2016.  Merchant Fleets of the World Privately-Owned, Oceangoing Merchant Vessels of 1,000 Gross Tons and Over as of January 1, 2016,” 

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