When Senator Wesley L. Jones took the Senate floor in 1920 to defend Section 27 of the Merchant Marine Act, known today as the Jones Act, he echoed the preamble of the Act that said: “It is necessary for the national defense and for the proper growth of [America’s] foreign and domestic commerce that the United States shall have a merchant marine.” Jones’ words provided the dual objectives of his famous act: safeguarding national security and fostering American prosperity—two objectives that remain relevant in U.S. policymaking today. However, the Jones Act has not been successful in providing the U.S. with a formidable shipbuilding base because of a lack of consistent demand.
Today, the Jones Act is often cited as one of the most sweeping instances of modern industrial policy in the United States. The Jones Act, legislation that requires requires goods transported by water between U.S. ports to be shipped on vessels that are U.S.-built, U.S.-owned, and U.S.-crewed, was intended primarily to keep the industry of shipbuilding, which faced high domestic building and operating costs due to Progressive Era reform, anchored at American ports and shipyards, thereby protecting jobs for shipbuilders and mariners. Many analysts view the act as economic policy first and defense policy second. The Cato Institute, in their 2018 critique of the Jones Act, described it as “protectionism cloaked in national security.” Historians tend to agree. For the approximately 250,000 shipbuilders, dock workers, and seamen, this protection was vital because the UK, Canada, Japan among others were all able to provide similar services at lower cost. From a very narrow perspective, this policy succeeded: the American shipbuilding industry still exists, employing hundreds of thousands of Americans despite cheaper prices abroad. But, by every other economic measure, the Jones Act has fallen short.
The authors of the Jones Act, similar to the authors of most other protectionist policies, expected that domestic shipbuilders would eventually grow strong enough to compete without government shelter. Providing a temporary “grace period” would eventually create economies of scale, newfound efficiencies and expertise, and encourage comfortable investment into expensive capital goods that would make prices competitive in the global market. Senator Jones himself wrote that the Jones Act was only needed until the day that United States shipbuilding could compete with global prices. Well, 100 years later, and that day is still yet to come: U.S.‑built commercial ships cost roughly two to four times more than comparable vessels constructed abroad. The U.S. Navy estimates that Chinese yards now produce more than 200 times America’s annual tonnage. Rather than fostering a self‑sustaining industry, the Jones Act has left U.S. commercial shipbuilding largely dependent on the protection it provides.
Despite well‑documented economic inefficiencies, proponents of the Jones Act, including many in Washington, maintain that the Jones Act’s high costs are a necessary price for national security. To a point, their logic holds: the United States cannot allow its shipbuilding base to vanish or rely on foreign yards to produce naval and merchant vessels alike without incurring major risks to security, readiness, and, by extension, deterrence. In testimony before Congress, Rear Admiral Mark Buzby, then Maritime Administrator, warned that a foreign‑built merchant fleet would erode the United States’ ability to surge sealift capacity and sustain forces in wartime. Indeed, 91 maritime nations, or roughly 80% of the world’s coastal states, have similar cabotage laws to preserve their sea power. In a world of supply chain warfare, where economic chokepoints and tariffs can swing a conflict, the legislators were correct to ensure that critical shipbuilding capacity remained onshore.
But the cost is clearly too high. Despite the author’s reasonable intentions to ensure that American shipbuilding remained prepared to sustain a strong naval fleet while providing a boost to the domestic economy, the fact of the matter remains that this has not borne out. The U.S. Navy is woefully underequipped for a protracted conflict of any kind, and certainly would not be able to compete in a war of attrition with its most pressing challenger, China. American taxpayers are paying for exorbitantly expensive ships that are often delayed and in need of frequent maintenance while allies and enemies alike are able to get ships of similar caliber for a fraction of the price.
So where did lawmakers go wrong? They diagnosed a genuine vulnerability and imposed what looked like straightforward controls, yet a century later the situation is arguably worse than it was when the Jones Act passed. The Act locks in the supply side—guaranteeing that U.S. yards will fill domestic orders—but it does nothing to ensure that demand for new tonnage stays steady. When the Act was first signed into law, this was not an issue: lawmakers assumed that post-war reconstruction, traffic through the Panama Canal, and the growing U.S. economy would create steady demand for new ships. In the century since then, however, demand has wavered, and the protected yards lost the scale and efficiency the law’s authors envisioned.
Americans have seen the consequences of this inconsistent and declining demand. As orders slow, shipyards lay off workers, sell equipment, and run down inventories of spare parts. Those cutbacks push per‑ship costs even higher and lengthen delivery schedules, which further depresses demand, thus creating a self‑reinforcing “doom loop.”
This feedback loop is not simply theoretical. These downward spirals are already exacting costs. In 2024, Philly Shipyard, one of the nation’s last large commercial yards, announced 275 layoffs after its orderbook evaporated, mothballing an entire production line. The Navy’s experience is no better: a 2025 GAO review found that the average surface combatant was delivered almost two years late and 25 percent over budget, effectively forcing the service to pay for eleven hulls while receiving the capability of nine. Logistics capacity is eroding just as quickly; GAO projects that retirements will outpace replacements through the late 2020s, shrinking surge sealift capacity by more than a quarter before new ships arrive. The doom loop is not just a theoretical model, it is playing out in real time. America’s maritime industrial base is shrinking precisely when great-power competition demands expansion.
Steps must be taken to break this vicious cycle. Repealing the Jones Act and outsourcing construction of domestic merchant and naval vessels is not a viable option given national‑security concerns. Yet prices today are too high for yards to remain competitive as is. The answer is largely economic: if Washington underwrites demand, through subsidies or direct orders, U.S. yards could regain the scale and efficiency lawmakers envisioned when the Act was drafted. In particular, the United States should commit to a sustained program of government shipbuilding, especially auxiliary and sealift vessels, to place the Navy and its industrial base on firmer ground.
Fortunately, both political and military imperatives support this investment. As tensions with China rise and the United States plans for a potential South China Sea contingency, maintaining a strong fleet and the domestic industrial base that backs it sits near the top of Congress’s agenda. Congress estimates that for a conflict with China, the U.S. requires 381 ships, a number that will not be met until at least 2050. With a President committed to expanding industrial jobs, a Navy that needs ships sooner, and an adversary looming, Congress can allocate the resources and create the steady demand needed to push shipyards toward the positive, productive equilibrium the Jones Act was meant to foster.
Did the Jones Act work? So far, no. Supply side policy is beholden to assumptions of demand that, in the case of the Jones Act, did not hold up. But Americans should not write the Act off yet. Increased demand from Congress can help restore shipbuilding, the Navy, and the Jones Act.
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David Glick is an undergraduate student studying Political Science, Security, and Technology. His interests include economic policy and foreign affairs.
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