Jones Act Explained
The Jones Act
A 1920 shipping law that has shaped the cost of nearly everything in the U.S. Virgin Islands — and the rest of America — for over a century. Here's what it actually says, what it costs, and why it's so hard to change.
What is the Jones Act?
The Jones Act is Section 27 of the Merchant Marine Act of 1920 — a federal law signed by President Woodrow Wilson on June 5, 1920, less than two years after the end of World War I. Its formal name is rarely used. Everyone just calls it the Jones Act, after Senator Wesley Jones of Washington state, who sponsored it.
In plain language, the law says this: any goods shipped by sea between two U.S. ports must travel on a ship that is American-built, American-owned, American-flagged, and crewed by American citizens or permanent residents. That's it. Four requirements. Any ship that doesn't meet all four is prohibited from carrying cargo between U.S. ports — regardless of how much cheaper, faster, or more efficient it might be.
The law was designed to protect the American merchant marine after World War I, when the U.S. military had depended heavily on foreign ships to move troops and equipment to Europe. The idea was to ensure the country always had a domestic fleet available for national defense. Over a century later, the law remains on the books — largely unchanged.
U.S.-Built
The ship must have been constructed in an American shipyard. A foreign-built ship — even one owned by Americans and crewed entirely by Americans — cannot carry cargo between U.S. ports.
U.S.-Owned
The vessel must be owned by U.S. citizens or a U.S.-organized corporation majority-owned by U.S. citizens. Foreign ownership — even partial — disqualifies the ship.
U.S.-Flagged
The ship must fly the American flag and be registered under U.S. documentation with a coastwise endorsement issued by the U.S. Coast Guard.
U.S.-Crewed
At least 75% of the crew must be U.S. citizens or permanent residents. The master and chief engineer must be American citizens.
The shipping cost premium
Because Jones Act ships must be built and staffed in the United States — where labor and construction costs are significantly higher than overseas alternatives — the law creates a built-in price premium for domestic shipping. Here's what that looks like in concrete numbers.
The Jones Act was meant to protect the American merchant fleet. Instead, the fleet has shrunk by 64% since the 1980s — leaving fewer ships to serve domestic routes at ever-higher costs.
The USVI is exempt — but it's complicated
The U.S. Virgin Islands is formally exempt from the Jones Act's cabotage provisions under 46 U.S.C. App. 877. Foreign-flagged ships are legally permitted to carry cargo between USVI ports and other U.S. ports without being subject to the four Jones Act requirements. This is a significant economic advantage that Puerto Rico, Hawaii, Alaska, and Guam do not have.
A 1999 Government Accountability Office study illustrated the difference starkly: shipping oil from Alaska's North Slope to the USVI — a voyage twice as long, requiring a trip around South America's Cape Horn — cost $2.35 per barrel. Shipping the same oil from Alaska to the Gulf Coast, a far shorter route, cost $7.15 per barrel. The difference was almost entirely attributable to the Jones Act applying to the Gulf Coast route but not to the USVI.
Why the USVI still feels it
The formal exemption helps — but it doesn't insulate the territory from Jones Act economics entirely. Here's why:
St. Thomas and St. John get most of their fuel through Puerto Rico-based wholesalers. Puerto Rico IS subject to the Jones Act. So when fuel travels from U.S. refineries to Puerto Rico and then onward to St. Thomas or St. John, the Jones Act pricing is already baked in before the cargo leaves Puerto Rico. In January 2026, the national average gas price was $2.87/gallon. Regular gas on St. Thomas averaged $4.78/gallon — a $1.91 premium, driven in part by this supply chain dynamic.
Most consumer goods follow the same path. A large portion of what reaches USVI shelves comes through mainland distribution hubs or Puerto Rico — meaning Jones Act shipping costs are embedded in the price before the goods even reach USVI waters, where the exemption would otherwise apply.
The exemption benefits mostly direct importers — businesses and industrial operations that can ship directly from foreign ports. For everyday household goods, the supply chain reality means Jones Act economics are felt regardless of the formal exemption.
- National security. The U.S. military depends on domestic sealift capacity. A domestic merchant fleet ensures ships are available in wartime that aren't controlled by foreign governments.
- American jobs. The law supports American shipyard workers and maritime crews. Repeal could eliminate tens of thousands of U.S. maritime jobs.
- Supply chain reliability. Jones Act carriers provide regular, scheduled service on domestic routes that foreign operators might abandon during crises or when routes become unprofitable.
- Most countries do it. Cabotage laws — restrictions on foreign ships carrying goods between domestic ports — are common worldwide. The U.S. is not unusual in this regard.
- The fleet is failing anyway. The Jones Act fleet has shrunk from 250 ships in the 1980s to 91 today. The law hasn't preserved the merchant marine — it's presided over its collapse.
- Island residents pay the price. The cost burden falls disproportionately on residents of Hawaii, Alaska, Puerto Rico, and Guam — people who have no alternative to ocean shipping. A 2019 OECD study estimated repealing the Jones Act would generate $19–64 billion in economic gains.
- Crisis response is slower. After hurricanes Harvey, Irma, Maria, Sandy, Katrina, and Rita, the Jones Act was temporarily waived because there weren't enough compliant ships to deliver relief. The law designed for emergencies had to be suspended in every major emergency.
- U.S. shipbuilding has declined regardless. Only one of the five U.S. shipyards that build Navy and Coast Guard vessels also builds Jones Act commercial ships. The law hasn't saved the industry it was meant to protect.
Lower fuel costs
Reform would most immediately affect fuel prices for territories like Puerto Rico that buy through Jones Act-constrained supply chains. The Puerto Rico Electric Power Authority has documented that Jones Act shipping raises its LNG costs by as much as 30%. That flows directly to utility bills.
Lower consumer goods prices
The Federal Reserve Bank of New York estimated that shipping a 20-foot container to Puerto Rico under the Jones Act costs $3,063 vs. $1,503 for the Dominican Republic on the same route. That cost difference is embedded in every product on the shelf.
Faster disaster response
The Jones Act has been waived in every major U.S. hurricane since 2005 because there weren't enough compliant ships to deliver aid. Reform advocates argue permanent flexibility would mean faster relief in future disasters — particularly relevant for the USVI after 2017.
Uncertain tradeoffs
A 2013 GAO report concluded that "because so many other factors besides the Jones Act affect [shipping] rates, it is difficult to isolate the exact extent" of its impact. Reform would produce benefits — but the precise magnitude is disputed, and some domestic maritime jobs and services would likely be disrupted in transition.
Sources: Merchant Marine Act of 1920, Section 27 (46 U.S.C.); Congressional Research Service, "Shipping Under the Jones Act: Legislative and Regulatory Background" (R45725); Federal Reserve Bank of New York, Puerto Rico Shipping Study (2012); Government Accountability Office, Alaska North Slope Oil Shipping Study (1999); Cato Institute, "The Jones Act: A Burden America Can No Longer Bear" (2022); Econofact, "The Jones Act and the Cost of Shipping Between U.S. Ports"; OECD Regulatory Policy Working Paper (2019); USVI Economic Development Authority; VIPCA Chartering Regulation Guidance; DLCA Fuel Price Survey (Feb. 2025); WTJX/VI Source reporting on USVI gas prices (Jan.–Mar. 2026).