New Legal Challenges as Foreign Ships Enter U.S. Domestic Trade Under Emergency Waiver

The Trump administration's recent 60-day Jones Act waiver is changing how coastal shipping operates in the U.S., but it raises a bigger question: what rules apply to foreign ships now involved in domestic trade?

This waiver was issued for national defense reasons to manage short-term disruptions in the oil market caused by tensions between the U.S. and Iran, especially due to the situation in the Strait of Hormuz. It temporarily lifts the cabotage restrictions of the Jones Act, which means foreign-flagged ships can now transport goods between U.S. ports. However, the specifics of what laws apply become less clear beyond this exemption.

The waiver allows foreign vessels to carry oil, liquefied natural gas, fertilizers, coal, and other vital goods between U.S. ports for the next two months, effectively opening up domestic coastal trade to international shipping.

A recent legal review by K&L Gates shows that there is a lot of uncertainty surrounding this situation. While the waiver clearly relates to navigation and vessel inspection laws, it doesn’t explain how other U.S. laws regarding taxes, labor protections, and immigration will impact foreign vessels traveling on domestic routes.

This lack of clarity could make it complicated for operators to ensure compliance.

Some important questions remain unanswered: Will foreign shipowners have to pay U.S. taxes on income from domestic routes? Will foreign crews need visas or work permits to operate between U.S. ports? Will U.S. labor standards, like minimum wage requirements, apply to crew members?

The U.S. Government Accountability Office has previously warned that these overlapping legal obligations could present a significant “cost of compliance” for foreign vessels entering U.S. domestic trade, which could negate any advantages gained from the waiver.

A different analysis by Holland & Knight emphasizes how narrowly the waiver was designed and highlights the many undefined elements. They note that the exemption from the U.S. Department of Homeland Security, granted at the request of the Department of War, permits foreign vessels to operate across at least 659 product categories without geographic restrictions but provides little guidance on how broader U.S. laws will apply. This situation offers operators clear permission to trade but leaves them uncertain about fulfilling compliance obligations.

So far, regulatory guidance has been inconsistent. U.S. Customs and Border Protection has given some operational advice, but there's no comprehensive framework from other agencies regarding enforcement of these laws.

At the same time, there are increasing transparency requirements. Foreign operators using the waiver must submit detailed voyage information to the U.S. Maritime Administration, which must be publicly disclosed shortly after, potentially inviting scrutiny if compliance issues arise.

The uncertainty is making waves in the industry, prompting strong reactions. The AFL-CIO has labeled the waiver as “unnecessary and ineffective,” claiming it opens U.S. waterways to foreign competitors while doing little to lower fuel costs. Labor leaders caution that without clear enforcement of U.S. labor laws, foreign operators might gain an unfair advantage in the domestic market.

Security concerns are also being emphasized. The Navy League of the United States, in its 2025–2026 Maritime Policy Statement, warns that allowing more foreign participation in domestic shipping could add new challenges for federal oversight. Without the framework of the Jones Act, the U.S. Coast Guard and Customs and Border Protection may need to screen foreign mariners across many inland and coastal locations to prevent potential security issues.

These concerns are magnified by the broader context, as shipping markets continue to face challenges from events in the Strait of Hormuz.

Currently, this policy has opened U.S. domestic trade to foreign ships—but without a clearly defined set of rules to guide them. Until new regulations are established, shipowners and charterers are left navigating through a fog of uncertainty.