By Dr Rebecca L. Grant
Lexington Institute
America has a historic opportunity to revitalize our nation’s maritime power. With powerful bipartisan backing, both Congress and the Trump administration have bold plans to invest in the U.S. Navy and in commercial ships, harbors, and infrastructure. The Shipbuilding and Harbor Infrastructure for Prosperity and Security (SHIPS) Act of 2025 and Executive Orders from the White House have put shipbuilding at the top of national priorities. These plans rest in part on a 100-year-old policy that has ensured America’s readiness to fight overseas and preserved a core of market demand for U.S. shipping amidst vast global competition. This policy is the U.S. Merchant Marine Act of 1920— commonly known as the Jones Act, so named for Senator Wesley L. Jones of Washington state, its sponsor. The Jones Act requires ships in the coastwise trade to be built in the USA, with U.S. ownership and American crews.
A new study from the Lexington Institute analyzes the roles of the Jones Act in guarding American coastlines and stimulating the maritime industrial base. Read the study here.
The Jones Act serves two purposes. First is safeguarding ship- ping between U.S. ports for vital tasks such as supplying gasoline to Florida. America, like most nations, protects coastwise trade. Cabotage laws in 105 countries cover 85% of the world’s coast- line. The full scope of the waterborne freight moved under Jones Act rules touches 650,000 American jobs.
The second task is often overlooked. What is less commonly understood is that the market forces of the Jones Act fleet are a powerful incentive for investment and innovation in U.S. shipbuilding.
None dispute that America is in a perilous position due to its tiny merchant fleet. The ocean-going fleet of the U.S. tallies 188 ships, compared to about 5,500 sailing under China’s flag. China received orders for 1,500 ships in 2023, while new U.S. ship orders totaled only five. Of the 188 ships in the ocean-going fleet, 92 are eligible for coastwise trade under the Jones Act, according to statistics from 2025.
The SHIPS Act aims to expand the U.S.-flagged international fleet, boost U.S. shipbuilding capacity, strengthen the maritime workforce, and enhance maritime security. The Jones Act is a prime incentive for building ships at American yards. Market forces shaped by the Jones Act have recently driven the design and construction of new ships like the LNG bunker Progress; they have also helped attract major investment to the Philly shipyard for new Aloha-class containerships. Simply put, the Jones Act is an essential component of America’s long-term strategy for sea power.
The Jones Act is also essential to national security. Without it, look for China to move in on the coastal trade. The international shipping crisis, caused by Iran’s attacks across the Strait of Hormuz, put the Jones Act in the spotlight at a difficult moment. On March 18, 2026, and again on May 17, the Department of Homeland Security granted a sweeping and unprecedented waiver of the Jones Act. The intent was to allow foreign-flagged tankers and other ships to surge deliveries between U.S. ports to make up the gap.
But the geopolitical consequences emerged quickly. On May 21, the Chinese vessel Jin Zhou Wan, owned and operated by Chinese shipping giant COSCO, took advantage of the national security waiver to move a cargo of asphalt from New Orleans, Louisiana, to New Haven, Connecticut, making the delivery on May 28, 2026.4 That’s why the Jones Act is a pillar against Chinese intrusion into American waterways.
This paper analyzes the role of the Jones Act fleet and the coast- wise trade in stimulating that innovation. The key factor in this analysis is not the past, but the future.