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 abroad, including Trinidad and Tobago and African suppliers. This was not because the U.S. lacked gas. The U.S. has become the world’s dominant LNG exporter. The reason was policy. Democrats on the Puerto Rico Financial Oversight and Management Board refused to approve large-scale purchases of U.S. LNG. Trump pushed for a shift toward U.S. energy. The board blocked it. In August, he removed all but one member of the board. By December, the board approved a deal to source almost all of Puerto Rico’s LNG from New Fortress Energy. The good news is that Puerto Rico is finally buying American gas. The bad news is that the Jones Act makes the deal far more expensive than it needs to be. Because there are no Jones Act-compliant LNG tankers, U.S. gas must be shipped to Mexico, liquefied there, and then sent on to the island. The detour adds roughly $500M per year to electricity costs. That cost lands on families and businesses that can least afford it.

This episode captures the deeper problem. Puerto Rico’s economic pain is not an inevitable feature of island life. It is a man-made cost premium layered on top of an already fragile economy. The Jones Act regime requires that goods moved by water between US ports travel on vessels that are U.S.-flagged, largely U.S.-built, U.S.-owned, and U.S.-crewed. Puerto Rico is treated as part of that domestic system. On the mainland, firms can route around shipping bottlenecks with trucks and rail. Puerto Rico cannot. A shipping restriction, therefore, becomes an economy-wide markup.

The evidence is not exotic. A New York Fed report notes that shipping to Puerto Rico is more costly than to nearby islands and highlights reduced competition, with mainland to Puerto Rico routes handled by a small number of carriers. The same analysis compares container costs from the U.S. East Coast to Puerto Rico with costs to the Dominican Republic and Jamaica and finds the Puerto Rico lane more expensive despite being shorter. This is the Jones Act operating as a hidden tax.

Hidden taxes are often the most regressive. When shipping costs rise, the price of essentials rises. Food, fuel, medicine, and construction materials dominate household budgets. A policy that inflates those prices functions like a stealth levy on ordinary families. One credible estimate models the burden as equivalent to a 30.6% tariff on certain final products shipped from the mainland.

Energy provides the cleanest test. A Congressional Research Service analysis states that there are no Jones Act-qualified LNG tankers and that the U.S. has not built one in decades. That single fact explains why noncontiguous markets cannot fully benefit from mainland LNG under domestic shipping rules. This is not a few cents on a can of soup. It shapes the entire energy stack. Power prices influence industrial competitiveness, housing costs, and the cost of everyday life. In Puerto Rico, the penalty is about $500M per year.

Remove the structural penalty, and the island starts winning by default. The right pitch for Puerto Rico is not subsidies and speeches. It is arbitrage plus certainty. The island sits astride Atlantic and Caribbean lanes. It uses the U.S. dollar and fits U.S. commercial practices. It has a bilingual workforce and an existing pharma and manufacturing base. When you remove a built-in shipping markup and replace red tape with predictable rules, investment does not need to be coaxed. It arrives because returns become obvious. A thriving Puerto Rico would also be a nearshore supply chain asset, strengthening logistics, light manufacturing, and pharmaceuticals closer to the mainland and farther from the China risk.

This is why President Trump should make Puerto Rico a signature second-term economic project. The core move is simple. Permanently exempt the island from the Jones Act’s cargo restrictions and pair that freedom with a pro-growth freeport framework modeled on charter city ideas. The goal is to replace dependency and high-cost economics with a rules and ports growth strategy that can plausibly make Puerto Rico the Singapore of the Caribbean.

The Singapore analogy is not about copying a city-state. It is about a package deal. Freedom to trade, world-class throughput, boring and stable taxes, and rules that global capital recognizes. Start with prosperity zones anchored at ports and industrial corridors. San Juan for logistics, Ponce for deepwater ambitions, and targeted energy and manufacturing nodes. Give these zones one-stop permitting with hard deadlines and deemed approvals for routine permits. Prioritize power, water, and port throughput. Digitize licensing and procurement so the process is legible and fast.

Investors also price the rule of law. Puerto Rico should establish an international commercial division with English first proceedings by default for qualifying cases, specialist judges, predictable procedures, and fast timelines for contract enforcement and injunctive relief. Singapore built an export industry in dispute resolution by offering exactly this kind of predictability. Puerto Rico can do the same within the U.S. system.

Trade facilitation matters. You cannot sell a trade hub while keeping slow and uncertain port processes. Congress should authorize a true freeport framework inside the zones, with digitized customs workflows, pre-clearance, and rapid inspections for trusted shippers. The policy goal should be explicit. Make Puerto Rico the easiest place in the region to land, process, and reexport goods.

Taxes should be simple and investment-grade. The Singapore move is not just low rates. It is stability and clarity. Clear rates, broad bases, minimal carve-outs, and long-term stability commitments that lower policy risk. Emphasize real investment and job creation, not paper relocations. Puerto Rico already has unusual tax features that can be simplified and anchored in federal statute to reduce policy risk.

Deregulation should target throughput, not headlines. Measure time to build. Housing approvals in months, not years. Energy interconnection timelines with enforceable deadlines. Streamlined environmental review with clear standards and quick judicial resolution. When time to build falls, risk-adjusted returns rise.

Critics will say local mismanagement is a reason to keep the system. That gets it backwards. High costs and dependency funnel opportunity through political choke points. Lower structural costs and a larger private sector reduce the leverage of gatekeepers. Pair the freedom package with aggressive fraud and waste investigations, transparent procurement, and strict audit capacity so gains are not siphoned off.

Supporters of the Jones Act deserve a fair hearing. They argue the law supports national security, U.S. shipyards, and a domestic mariner workforce for emergencies. But even CRS materials acknowledge concerns about a dwindling domestic fleet and the need to reassess how the U.S. maintains surge sealift capacity. There is precedent for territorial flexibility. The U.S. Virgin Islands and other territories are exempt from Jones Act cargo rules, while Puerto Rico is not. If a policy justified as strategic capacity cannot even supply compliant LNG shipping, the capacity argument is not being met in practice. The honest alternative is to fund national security goals directly through defense procurement, sealift readiness, mariner pipelines, and shipyard modernization, not by forcing Americans in noncontiguous jurisdictions to overpay forever.

There is also the politics. Today, Puerto Rico residents pay about $5B in federal taxes each year while receiving about $40B in federal aid. That imbalance fuels calls for statehood. Statehood would likely mean two Democratic senators, four to five Democratic House members, and six to seven electoral votes. The conservative answer is not stagnation. It is autonomy plus growth. If Puerto Rico thrives under a freedom and investment model, the emotional and fiscal case for statehood loses oxygen. Prosperity becomes the disincentive.

Why Trump and why now? Trump has already done what many said was impossible. He forced the system to move Puerto Rico onto U.S. LNG, breaking years of political and regulatory resistance and proving that entrenched arrangements can be overturned. That success clarifies the moment. The first step was energy normalization. The next step is structural reform. Trump is positioned to challenge legacy protectionist arrangements and align this effort with an America First agenda that lowers distortions, normalizes trade and energy sourcing, and pulls supply chains into the U.S. orbit. Temporary waivers are narrow and situational. The durable fix is legislative. Trump should set the priority, frame it as a national economic fairness issue, and demand a vote.

Puerto Rico does not need pity. It needs equal treatment and pro-growth rules. Exempt the island from the Jones Act cargo restrictions and build prosperity zones with fast permitting, trusted commercial courts, and a true freeport framework. The result is lower living costs, saner energy, stronger investment, less room for rent seeking, and a Puerto Rico that becomes a strategic U.S. asset rather than a managed problem.

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