So, this is my jams. First, we have to acknowledge that the Jones Act is more a continuation of many acts before. As far as domestic trade is concerned there have almost always been laws on the books limiting domestic trade from foreign flagged vessels.

Some background: Although the US has had varying degrees of dedication to laissez faire economics, shipping is the primary exception. Trade has always been the lifeblood of this nation and our politicians have always paid careful attention to it. If we think back to the origin of the nation, the first Congress passed "An Act for Registering and Clearing Vessels, Regulating the Coastal Trade, and For Other Purposes" which, as the name implies, limited coastal trade to US flagged vessels. Thinking ahead a bit, the War of 1812 was fought, at least in part, because Great Britain was snagging our sailors and impeding our trade. The Barbary Wars, similarly, occurred because they were taking American ships. From that first act, coastal trade was limited to US ships through cabotage laws. In many regards the Jones Act was simply continuing that trend.

Now then, the US, which has always been a trading nation, entered a sort of golden age of shipping in the early to mid nineteenth century. American ships were some of the finest in the world and American sailors could be found in any port. This golden age did not last long. By the late 1850s our shipping had already started to flag (heh) in favor of British ships. The Civil war continued that trend of collapse. Most ships were drafted by the Union military, while those ships that continued on merchant passages were targeted by Confederate privateers and blockade runners. At the end of the war the US merchant marine was decimated. This problem was compounded by the American obsession with wooden sailing ships, while the British were quickly transitioning to steamships. American ships simply couldn't hold up and the country as a whole refused to admit it. Between 1850 and 1898 the percentage of American exports carried on American ships decreased from 72% to a mere 9%.

But, this is only part of the story. The more complicated truth is that American flagged ships were increasingly unnecessary in the second half of the nineteenth century. American merchants and businessmen could get better deals and (importantly) more regular schedules from British steam ships, regardless of patriotism. As the late nineteenth century and twentieth century progressed the trend became for ships to use "flags of convenience," basically switching out the flag flown to whichever nation was cheaper. The reasons are fairly apparent. The US had minimum wage laws, many Southeast Asian countries did not. In that line, laws were passed that sailors could be hired at local rates in foreign ports for round trip voyages.

The exception to this was domestic trade ,so called "brown water" trade. Larger ships, railroads, and industrialization all contributed to the decline of blue water American ships, but coastal trade remained strong. It wasn't economically conducive for small trade ships to switch to steam, at least, not immediately.

WWI proved an artificial boon to the shipping industry. The US needed ships to get war supplies across the Atlantic and the ships from other nations were otherwise occupied. The US created the Emergency Fleet Corporation to build and maintain a solid Merchant Marine during the first World War. The Jones Act sought to promote American merchant marine by limiting the power of other nations to set shipping rates. It was supposed to encourage the development of the American insurance industry and to extend the special relationship that railroads had with the US government to domestic shipping. It has to be admitted that this protected domestic shipping to a remarkable extent, but did almost nothing for blue water shipping.

As far as the modern effects, large bulk carriers have made the domestic shipping industry largely invisible. Port cities are full of huge carrier whose tiny crews are mostly poorly paid foreign workers. But, the Jones Act meant that anything shipped from the US to small island like Puerto Rico cost way more than it otherwise would, given American wage and safety laws. In general this matters little on a macro level. Bulk carriers go from port to port carrying an unprecedented level of cargo, but in times of crisis like today, the full import of these laws is clear, given that the supplies they need are not ordinary by any means.

I hope this helps. There is more to this story, especially as far as unions and workers rights go, but that might be for another time. Let me know if you are interested.

Sources: Roland et al, The Way of the Ship, Fink, Sweatshops at Sea, Hohman, American Merchant Seamen.