How Trump Can Make Puerto Rico the Singapore of the Caribbean

Before President Trump took office for his second term, Puerto Rico bought much of its liquefied natural gas from Trinidad and Tobago and from African suppliers. That buying pattern had nothing to do with empty American wells. The United States had already become the world’s dominant LNG exporter. The bottleneck sat in San Juan’s oversight politics. Democrats on the Puerto Rico Financial Oversight and Management Board would not approve large-scale purchases of US LNG. Trump pressed the board to shift the island onto American molecules. The board held the line. In August 2025, he removed all but one member. On December 4, the board approved a seven-year supply agreement with New Fortress Energy that will source almost all of Puerto Rico’s LNG through that firm. The island is finally buying American gas, and families will still overpay for the privilege of doing so, because a cargo statute most mainland voters never encounter is still writing the freight bill.

The Jones Act requires that goods moved by water between US ports travel on vessels that are US-flagged, largely US-built, US-owned, and US-crewed. Puerto Rico counts as a domestic port under that rule. A factory in Ohio that cannot get a berth can put the same steel on a truck or a railcar. A plant in Ponce cannot. Water is the road. Because there are no Jones Act-compliant LNG tankers, and because Congressional Research Service analysts have recorded that the United States has not built one in decades, US gas bound for the island takes a legal detour. It is piped to Mexico, liquefied there, and sent on by a foreign-flag tanker that may carry the cargo once the molecule has left the formal coastwise trade. Colin Grabow at the Cato Institute has traced how this Mexico workaround, plus one aging ship operating under a narrow exemption, is what finally let US-origin gas reach Puerto Rico in volume. The detour adds roughly $500 million a year to electricity costs. That figure is not a rounding error on a kitchen table. It is a surcharge on power, and power is a surcharge on rent, food, and payroll.

A puzzled reader will ask whether the island is simply expensive because it is an island. Nearby islands are a useful control. The Federal Reserve Bank of New York, in a study later taken up in Heritage Foundation trade work, found that shipping to Puerto Rico costs more than shipping to neighbors outside the statute, and that mainland-to-Puerto Rico routes are handled by a small number of carriers. The same analysis put the cost of a twenty-foot container of household and commercial goods from the US East Coast at $3,063 to San Juan, $1,504 to Santo Domingo, and $1,687 to Kingston, even though the Puerto Rico lane is shorter. Russell Hillberry and Manuel Jimenez later modeled the Jones Act burden on certain final products shipped from the mainland as equivalent to a 30.6% tariff and estimated an annual welfare loss near $1.4 billion. Models can be argued with. The comparison to the Dominican Republic and Jamaica is harder to talk away. If geography were doing all the work, the shorter haul would be the cheaper haul.

Once the energy arithmetic is in view, the rest of the cost structure does not need a second tour. Food, fuel, medicine, and construction materials dominate family spending on the island. Raise the freight on those goods, and you have built a quiet levy that hits hardest where budgets are thinnest. Electricity priced under that kind of annual penalty already shows how a freight rule becomes an economy-wide markup. Island life would be costly in any case. The Jones Act is the extra increment that policy, rather than the Atlantic, chose to add.

If that increment came off, Puerto Rico would still have to earn its growth. Anyone promising a boom from a signature alone is selling a brochure. What would change is the starting line. The island sits on Atlantic and Caribbean lanes, uses the dollar, runs on US commercial paper, and already has a bilingual workforce plus a real base in pharmaceuticals and light manufacturing. Those are advantages capital can price. They are wasted when every inbound container and every BTU of gas carries a made-in-Washington premium. A serious second-term project would pair a permanent exemption from the Jones Act’s cargo restrictions with a freeport framework that makes the island easy to use. San Juan is the logistics hinge. Ponce is the deepwater bet. Energy and manufacturing nodes can sit where the grid and the piers already want them. Give those zones one-stop permitting with hard deadlines and deemed approval for routine filings. Put power, water, and berth throughput first. Digitize licensing and procurement so an investor can read the process without hiring a fixer.

The same investor will next ask who hears a contract fight. Puerto Rico could stand up an international commercial division with English-first proceedings for qualifying cases, specialist judges, and short clocks for contract enforcement and injunctions. Singapore did not become a booking center for disputes by accident. It sold predictability. The island can sell a version of that product inside the US system, which is a stronger pitch than a city-state can make, provided the dockets actually move. Trade facilitation is the same problem in a warehouse. Congress should authorize a true freeport inside the zones, with digitized customs, pre-clearance, and rapid inspection for trusted shippers. Landing, processing, and re-exporting a cargo should be faster in San Juan than anywhere else in the region, and a ship captain should be able to tell that this is true without a briefing book.

A tax code can undo the rest of this if it keeps changing shape. Low rates help. Stable rates help more. Clear schedules, broad bases, few carve-outs, and multi-year commitments that survive an election will do more for a plant manager than a holiday of credits that vanish in conference. Puerto Rico already has unusual tax features. The useful federal job is to simplify them and lock the useful pieces in statute, so policy risk stops dominating the spreadsheet. Housing approvals in months rather than years, interconnection timelines with enforceable deadlines, and environmental review that has a back end as well as a front end would raise risk-adjusted returns without another subsidy tour. Measure time to build. If that number falls, capital gets less picky about being coaxed.

Critics will say local mismanagement is why the old system should stay. High costs and thin private payrolls have the opposite effect. They force opportunity through political offices, which is how gatekeepers get leverage. Lower the structural costs and grow the private sector, and you shrink that leverage. Pair the exemption with fraud and waste cases, open procurement, and an audit shop that can actually finish a file. An exemption without daylight would be a gift to the same networks that already know how to bill the commonwealth.

Jones Act supporters have a better argument than their loudest critics admit, and it deserves to be stated in their own terms. They say the statute keeps a US-flagged fleet, US shipyards, and a mariner bench that the country would need in a surge. CRS materials, even while describing the law, record a dwindling domestic fleet and raise the question of whether present rules still produce the sealift they advertise. The territorial map already contains a hole in that story. The US Virgin Islands, American Samoa, and the Northern Mariana Islands are exempt from Jones Act cargo rules. Puerto Rico is exempt for passengers and trapped for freight. If a policy sold as strategic capacity cannot put a single compliant LNG tanker on the water, the capacity claim is failing in the one market where American gas is abundant, and American citizens are paying the markup. The cleaner method is to buy the security we actually want. Fund shipyards, mariners, and surge sealift through defense accounts, where the requirement can be specified and audited, rather than by charging families in noncontiguous jurisdictions a permanent freight premium.

Then there is the politics, which will not wait for a perfect paper. Puerto Rico residents pay about $5 billion in federal taxes each year and recieve about $40 billion in federal aid, and that gap is already the raw material of the statehood campaign, which would likely deliver 2 Democratic senators, 4 to 5 Democratic House members, and 6 to 7 electoral votes if the island entered the Union on present alignments so the conservative reply cannot be a shrug and a subsidy, it has to be a growth settlement that makes dependency look optional. Autonomy plus investment is that settlement. If the island gets cheaper power, cheaper freight, and rules that a plant manager can recite, the emotional case for statehood thins out because people who can earn will bargain differently from people who can only petition.

Trump is the official who can force the next vote because he already forced the last one. He moved Puerto Rico onto US LNG against a board that had spent years treating American supply as a problem to be managed. Temporary Jones Act waivers after storms expire before a ship finishes the run, as the Maria episode showed. A legislative exemption does not expire. He should name the exemption, attach the freeport and commercial-court terms so the bill is a growth statute rather than a favor, and put the question on the floor as a fairness issue for American citizens who happen to live where trucks cannot replace hulls. The first correction was energy sourcing. The second is the cargo rule that still makes that sourcing absurdly expensive.

Puerto Rico is 3 million US citizens living with a statutory markup that neighboring islands do not pay. Lift the cargo restriction, build the zones with permits that end, courts that keep time, and a freeport a shipper can use without a seminar, and the island becomes cheaper to live in and easier to invest in. That is a conservative project because it substitutes rules for rents. It is an America First project because it stops punishing a US market for buying US gas. Congress can seperate the sealift mission from this hidden tax whenever it chooses to write the statute. The President has already shown the old arrangement can be broken. The remaining work is to stop asking Puerto Rican ratepayers to finance a fleet that does not exist.

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Alexander Muse is a Fellow at the John Milton Freedom Foundation and publishes daily political analysis at amuseonx.com. Primary sources cited in this piece are linked inline; campaign finance figures are drawn from FEC filings, polling data from publicly released crosstabs, and legal claims from filed pleadings. Corrections are posted to the original URL with a dated changelog. Readers who identify errors are invited to contact the author directly. Each op-ed edited for grammar and clarity using Ai in partnership with Grammarly. Data provided in a sponsored partnership with Polymarket.