The Trump administration extended its waiver of the Jones Act for another 90 days on Monday, narrowing the exemption even as Americans continue paying the price of a war that's disrupted global oil markets just months before midterm elections. President Donald Trump's second extension of the waiver comes as the conflict he launched with Israel against Iran in late February continues to create economic turmoil through the disruption of global oil markets, just a few months before inflation-weary Americans head to vote in the midterm elections.
Trump issued his first 60-day waiver of the Jones Act on March 17, less than three weeks after the U.S. and Israel started the war by launching heavy strikes on Iran. The Trump administration extended the waiver in mid-May for another 90 days. The newest 90-day extension should last until mid-November, past the date of the midterms.
Energy Security or Election Strategy?
The latest extension will be narrowed to apply only to vessels hauling certain energy resources, a White House official told CNBC. The extension will also require the Pentagon to consult with the U.S. Maritime Administration and determine if the waiver applies to each individual shipping voyage, the official said. The new limitations were added to address concerns by the U.S. maritime industry, according to the official.
White House spokeswoman Taylor Rogers said the Trump administration took the step "to ensure our military and key industries maintain uninterrupted access to critical resources." Rogers said, "Data shows the waiver has driven a significant increase in domestic deliveries of essential products such as gasoline, diesel, and jet fuel. President Trump continues to take bold, commonsense action that protects and strengthens America's economic and national security."
Since Trump first waived the law, 210 voyages have been completed that otherwise would have been deemed unlawful, according to Maritime Administration data. The majority of these vessels were hauling gasoline and crude oil. Cato, citing that data, calculates that nearly 55 million barrels of cargo in total have been shipped by utilizing the waivers.
Kristin Whitman, senior vice president of government relations at the American Petroleum Institute, said in a statement, "We commend the administration's leadership in extending the Jones Act waivers, a critical action that will keep American energy moving, strengthen supply security and help protect consumers from unnecessary price volatility." Whitman also said, "This decisive step will ensure critical fuels reach the regions that need them most while reinforcing America's resilience amid ongoing global market disruptions."
Consumers Bear the Burden
Oil prices jumped about 5% Monday as doubt grew that the U.S. and Iran will reach a deal to increase ship traffic through the Strait of Hormuz. U.S. West Texas Intermediate futures climbed about 5% to close at $82.13 per barrel. Brent crude, the international benchmark, also settled around 5% higher at $87.72 a barrel.
The Jones Act is a 1920 law requiring that the transport of goods between American ports be conducted by U.S. vessels. It was intended as an effort to grow the domestic shipping industry after World War I. Some economists, including those at the libertarian Cato Institute, argue the Jones Act is an outdated form of protectionism.
Negotiations Stall as Blockade Continues
President Donald Trump told Axios on Sunday that the U.S. is "only semi-negotiating" with Iran, after he insisted last week that Washington and Tehran were in fact holding talks. Trump indicated that he would rely on the U.S. naval blockade to pressure Tehran rather than another wave of airstrikes. He said, "We are just watching Iran with its huge inflation and the fact they have no money."
Trump canceled a planned attack against the Islamic Republic on Aug. 1 to allow for negotiations. Iran's Foreign Ministry spokesman, Esmail Baghaei, said Monday that the U.S. must lift its blockade before Tehran would agree to fully open Hormuz. Baghaei said, according to the state news agency Tasnim, "As long as the U.S. naval blockade continues, the necessary conditions for the reopening of the Strait of Hormuz do not exist." He said Iran and Oman are holding bilateral negotiations over shipping routes in the strait.
The U.S. and Iran signed a memorandum of understanding on June 17 to open Hormuz to commercial ships, but the deal quickly collapsed as fighting erupted over which routes vessels could use. Iran launched multiple attacks on tankers transiting Hormuz along Oman's coast under U.S. military protection. Tehran demanded that ships sail through its territorial waters when transiting the strait. The U.S. staged multiple waves of airstrikes and reimposed its naval blockade in retaliation for the tanker attacks.
Trump often boasts that the U.S. naval blockade on Iranian ports has crippled the country economically. He told Axios Iran "is in very bad shape" as a result of the blockade. In an Aug. 10 post on Truth Social, Trump countered Iran's demand for financial compensation by saying he's "likewise demanding compensation from Iran" for all the people killed or injured by Iranian attacks over the years. He said Iran should also compensate families of innocent protesters killed by the Iranian regime over the past half-century. Trump wrote, "I have instructed my representatives to put this firmly into any, and all, future negotiations."
Trump's position marked a major shift from Aug. 3, when he warned Iran he was giving it one final opportunity to agree to a peace deal or risk "decapitation." At the time, Trump said he decided to hold off on ordering what would have been "the biggest attack since World War II" at the request of Saudi Arabia, the United Arab Emirates and Qatar. He later said, "It will work out. It always works out. It's like a chess game," referring to the back-and-forth with Iran.
Security Concerns Mount
The White House said the president was aboard Air Force One as he left a NATO summit, but The Washington Post reported that his departure included an elaborate ruse that concealed his travel. The Post said an Iranian assassination threat against President Donald Trump prompted an extraordinary operation last month in which he flew secretly from Turkey on an alternate military aircraft while the White House said he was aboard Air Force One.
Why This Matters:
The ongoing war with Iran, launched by the Trump administration less than three weeks before the first Jones Act waiver, continues to impose real costs on American families already struggling with inflation. Oil prices spiked 5% on Monday alone, pushing gasoline and heating costs higher as negotiations remain stalled. The administration's need to repeatedly waive a century-old shipping law reveals how the conflict has disrupted essential supply chains that Americans depend on. With midterm elections approaching in November, voters will weigh whether the administration's military and economic pressure campaign justifies the financial burden they're bearing at the pump and in their monthly budgets. The collapse of the June 17 memorandum of understanding and Iran's insistence that the U.S. lift its blockade suggest no quick resolution is in sight, meaning these economic pressures may persist well beyond the election.