The Enduring Costs of Protectionism in American Shipping
More than a century of protectionist policies shielding the domestic shipbuilding and shipping industries in the United States has resulted in a less competitive sector. Recent efforts to revitalize the industry, including those proposed by President Donald Trump, risk exacerbating existing structural weaknesses and driving up trade costs, according to economist Anne O. Krueger.
The Jones Act and Its Legacy
The cornerstone of U.S. Shipping protectionism is Section 27 of the Merchant Marine Act of 1920, commonly known as the Jones Act. This legislation mandates that all shipping between American ports be conducted on vessels that are built in the United States, owned by Americans, and crewed by American seamen . While intended to bolster the domestic industry, the Jones Act has effectively created a monopoly for domestic producers.
A History of Decline
Despite the protectionist measures, the U.S. Shipbuilding and shipping industries have experienced a steady decline since the implementation of the Jones Act. The only significant surge in activity occurred during World War II. Outside of that period, both the number of U.S.-built ships and the global presence of American-flagged vessels have consistently eroded .
Anne O. Krueger’s Expertise
Anne O. Krueger, a Senior Fellow at the Johns Hopkins School of Advanced International Studies and the Herald L. And Caroline Ritch Emeritus Professor of Economics at Stanford University, has extensively studied the detrimental effects of protectionism on various industries . She previously served as the World Bank Chief Economist from 1982 to 1986 and as the first deputy managing director of the International Monetary Fund (IMF) from 2001 to 2006 . Her research, including a 2025 interview with the American Economic Association, highlights the long-term costs of shielding industries from competition .
The Risk of Renewed Protectionism
Krueger argues that further protectionist measures, such as those recently proposed, are unlikely to revitalize the U.S. Shipbuilding and shipping industries. Instead, they risk increasing trade costs and reinforcing the structural weaknesses that have plagued the sector for decades .
Krueger’s perform underscores the importance of free trade and competition in fostering innovation and economic growth. The Jones Act, while intended to protect American jobs and industry, has ultimately hindered the sector’s ability to compete in the global market.