In the middle of a supply chain crisis, a federal agency is helping foreign countries make more money â€” and sending the bill to US consumers.
Youâ€™d think efficiency would be key during a supply chain crisis, but the current mess is only highlighting how often the government gets in the way of industry.
And you need to read why this one bad law is taking money out of your pocket.
Steve Forbes calls the Jones Act â€œa law that deserves to hit an iceberg.â€�
Like so many â€œgood intentionsâ€� coming out of Washington D.C., this protectionist policy has backfired in a big way.
The act requires that any cargo transported between two US ports must be hauled on ships that are built, owned, and operated by US citizens or permanent residents.
Since the US is no longer a major ship-building country, businesses typically use loopholes to make sure cargo sent from one US state to another makes a foreign stop â€” often Canada.
And if you noticed a fish stick shortage recently, you can blame that on the Jones Act and Bidenâ€™s Custom and Border Protection Agency enforcement.
Twenty-six million pounds of seafood was stranded in Canada a few weeks ago after the Customs and Border Protection slapped $350 million in penalties on companies importing seafoodâ€”and threatened $41 million more in fines if they were to haul it on into the US.
Apparently, the agency suddenly decided to take issue with a route seafood companies have been using since 2012 which involved giving all the fish filets a quick one-mile ride on a train track in Canada before taking it into Maine.
Itâ€™s not clear why the agency is so interested in making sure the spirit of the law is upheld by giving Canada more money to ship it across a longer stretch of Canadian railroad, but logic was clearly abandoned long ago in this area of policy.
Thankfully, that load of fish has been allowed to start moving again.
The Wall Street Journal reported on Sunday that Judge Sharon Gleason has issued a preliminary injunction barring further penalties while a related case works through the court system.
â€œWithout quick relief, Judge Gleason wrote, American seafood processors that rely on Alaskan fish â€˜are likely to temporarily shutter factories, jobs are likely to be lost, and the supply chain for USDA food bank and school lunch programs is likely to be disrupted.â€™ She cited John Connelly, the head of the National Fisheries Institute, saying that some processing companies already had been forced to cut their hours by 60%. â€˜More than 100 workers are not working as a result of this raw material catastrophe,â€� Mr. Connelly said. That means, he added, â€œAmerican families go without paychecks.â€™â€�
The Customs Border and Protection agency argued that the injunction wasnâ€™t needed because the supply chain was already stabilizing with fish imported from Russia.
It makes you wonder why they are so dedicated to using a protectionist law to financially cripple US companies.
Canadian rail owners and Russian seafood companies arenâ€™t the only foreign players benefiting from the Jones Act.
In an October article, Forbes pointed out that families struggling with high energy costs can also blame it on the misguided legislation.
â€œThe most pronounced perversions of the law are found regarding energy. For example, it would be logical for Puerto Rico to get its liquefied natural gas (LNG) from Georgia or Louisiana, but since there are no LNG tankers that meet Jones Act requirements, the island must import the gas from Russia and other foreign sources.
The same distortion phenomenon also holds true for the U.S. mainland. Itâ€™s cheaper for New England to get natural gas from Trinidad and Tobago or even Siberia than it is from the Gulf Coast.
We have the absurdity of refineries on the East and West Coasts finding it less expensive to import oil from abroad instead of transporting it from other parts of the U.S. California can get gas more easily from Singapore than from the Gulf Coast. â€�
The Organisation for Economic Co-operation and Development (OECD) has calculated that getting rid of the Jones Act would add about $135 billion to the USâ€™s economic output.
Thatâ€™s about $404 in higher costs of goods being passed along to every man, woman, and child in America.
Itâ€™s ironic a government policy thatâ€™s burdening most family budgets isnâ€™t even part of the mainstream media conversation.
Renewed Right will keep you up-to-date on any new developments in this ongoing story.