President Trump extends Jones Act exemption amid oil market turmoil due to Iran war

The Trump administration on Monday rolled back Jones Act exemptions but extended them for another 90 days, leaving U.S. shipping restrictions relaxed in a bid to preserve fuel supplies amid the Iran war.

President Donald Trump’s second waiver extension comes just months before inflation-weary Americans head to the polls in the midterm elections, as the war continues to cause economic chaos through disruptions to global oil markets.

Oil prices resumed rising while US oil reserves fell to their lowest level in decades after the Trump administration’s latest signal of a deal to reopen the Strait of Hormuz failed to materialize.

President Trump announced the first 60-day waiver of the Jones Act on March 17, less than three weeks after the United States and Israel launched a violent attack on Iran and started the war. The Trump administration extended the waiver for another 90 days in mid-May. The latest 90-day extension is supposed to last until mid-November, after the midterm elections.

However, a White House official told CNBC that the extension would be narrowed to apply only to ships transporting certain energy resources. The official said the extension would require the Pentagon to consult with the U.S. Maritime Administration to determine whether the exemption applies to individual voyages.

The new restrictions were added to address concerns from the U.S. maritime industry, the official said.

“We applaud the administration’s leadership in extending the Jones Act exemption. This is an important step that will help keep America’s energy moving, strengthen the security of supply, and protect consumers from unnecessary price fluctuations,” Christine Whitman, senior vice president of government relations at the American Petroleum Institute, said in a statement.

“This decisive action will ensure critical fuel gets to the areas where it is needed most and strengthen America’s resiliency as global markets continue to be disrupted,” Whitman said.

The Jones Act was a law enacted in 1920 that required the transportation of goods between American ports by American vessels.

This was aimed at growing the domestic shipping industry after World War I. But some economists, including the liberal Cato Institute, argue that the Jones Act is outdated protectionism.

Since President Trump first waived the law, 210 voyages that would have otherwise been considered illegal have been completed, according to Maritime Administration data. Most of these ships were transporting gasoline and crude oil. Citing that data, Cato calculated that a total of nearly 55 million barrels of cargo were shipped using the exemption.

White House press secretary Taylor Rogers said the Trump administration has taken steps “to ensure our military and major industries maintain uninterrupted access to critical resources.”

“Data shows that the waivers have significantly increased domestic deliveries of essential goods like gasoline, diesel, and jet fuel. President Trump continues to take bold, common-sense actions to protect and strengthen America’s economy and national security,” Rogers said.