July 2, 2021 1:23PM # New Reports Confirm the Jones Act’s Paltry Contributions to U.S. Shipbuilding By [Colin Grabow](https://www.cato.org/people/colin-grabow) --- SHARE When pressed to justify the Jones Act’s requirement that vessels used in domestic commerce be built in U.S. shipyards, supporters of the law often [insist](https://shipbuildersusa.org/critical-issues/the-jones-act/) the measure is needed to ensure a robust defense industrial base. Absent the requirement, some supporters [claim](https://cimsec.org/solutions-to-revitalizing-americas-strategic-sealift/), the United States would find itself bereft of large shipyards vital to meeting U.S. national security needs. Such arguments should be taken with a big grain of salt. As two new government reports make clear, what’s keeping these shipyards afloat is not the construction of commercial [Jones Act](https://www.cato.org/project-jones-act-reform) ships but orders from Uncle Sam. The first of these reports, from the U.S. Maritime Administration, [shows](https://www.maritime.dot.gov/sites/marad.dot.gov/files/2021-06/Economic%20Contributions%20of%20U.S.%20Shipbuilding%20and%20Repairing%20Industry.pdf) that military shipbuilding and repairs accounted for nearly 80 percent of industry revenue in 2019: [![MARAD](/sites/cato.org/files/styles/pubs_2x/public/2021-07/Screen%20Shot%202021-06-29%20at%202.36.32%20PM.png?itok=_MExAFXo)](https://www.maritime.dot.gov/sites/marad.dot.gov/files/2021-06/Economic%20Contributions%20of%20U.S.%20Shipbuilding%20and%20Repairing%20Industry.pdf) Notably, Jones Act ship construction is only a subset of commercial revenue which also includes repair services not subject to the law (indeed, some Jones Act vessels make use of [Chinese](https://www.cato.org/blog/creaking-jones-act-ships-turn-chinese-shipyards-maintenance-needs) shipyards for repairs and maintenance). Furthermore, of the commercial vessels that are built, few are the deep-draft, oceangoing ships that help sustain large shipyards. As the report points out, “nearly all deliveries of large deep-draft vessels (14 of 15) \[in 2019\] were to U.S. government agencies.” This isn’t an anomaly. The Maritime Administration’s last [report](https://www.maritime.dot.gov/sites/marad.dot.gov/files/docs/resources/3641/maradeconstudyfinalreport2015.pdf) examining U.S. shipbuilding, released in 2015, noted that 10 of 12 large deep-draft vessels delivered the previous year were to government agencies. Such figures comport with government [data](https://maritime.dot.gov/sites/marad.dot.gov/files/2021-05/DS_USFlag-Fleet_2021_0415_Bundle.pdf) showing an average of just 3 large Jones Act ships being collectively built by the country’s shipyards per year from 2000–2019 (and this decade’s output will almost certainly be [lower)](https://www.cato.org/blog/us-commercial-shipbuilding-output-abysmal-its-about-get-worse). Heavy reliance on government contracts is further confirmed by yet another recent [report](https://www.bea.gov/news/2021/marine-economy-satellite-account-2014-2019) from the Bureau of Economic Analysis. Taking statistical measurements of the country’s marine economy, the report placed the value-added of U.S. shipbuilding (which does not include smaller vessels such as tugboats or those used on inland waterways) in 2019 at $11.85 billion (in 2014 dollars). Of that, “military ships” accounted for $11.551 billion, or 97.4 percent of the total. Measuring by [gross output](https://www.bea.gov/data/special-topics/marine-economy) tells a similar tale. Of the estimated $27.795 billion in shipbuilding output, military ships comprised $27.058 billion (97.3 percent). The data reveals a consistent theme, with the output percentage regularly exceeding 90 percent in the five years prior to 2019. The more that careful scrutiny of the Jones Act’s U.S.-built requirement is applied, the less sense it makes. By forcing the use of domestically-constructed vessels that cost [4–5 times](https://fas.org/sgp/crs/misc/R45725.pdf) more than those built abroad, it means a smaller fleet. And the ships that do exist are [older](https://twitter.com/cpgrabow/status/1344662079584792576) and less capable than would otherwise be the case, with the high expense of new vessels serving as a significant deterrent to fleet modernization. All in exchange for a paltry amount of commercial shipbuilding. This is an awful trade-off, both for the country’s economic prosperity and its [national security](https://www.cato.org/policy-analysis/rust-buckets-how-jones-act-undermines-us-shipbuilding-national-security). ##### Related Tags [Trade Policy](https://www.cato.org/trade-policy), [Project on Jones Act Reform](https://www.cato.org/project-jones-act-reform) [![Creative Commons License](/build/cato_2020/images/creative-commons.svg)](http://creativecommons.org/licenses/by-nc-sa/4.0/) This work is licensed under a [Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License](https://creativecommons.org/licenses/by-nc-sa/4.0/).