Trump offers US protection in the Strait of Hormuz for a 20% fee. How would that work?
Trump Proposes 20% Toll for American Naval Protection in Strategic Waterway
Trump offers US protection in the Strait – Following the outbreak of hostilities between the United States, Israel, and Iran, maritime operators have increasingly demanded enhanced security measures for their vessels navigating the Strait of Hormuz. This vital commercial corridor, which Iran maintains control over, has become a focal point for shipping concerns. President Donald Trump has now stepped forward with a solution, though it comes with a substantial price tag attached.
According to a statement released on Truth Social on Monday, the American president declared that the United States would assume responsibility for safeguarding maritime traffic through this critical passage. However, this service would not come without compensation. Trump outlined that cargo moving through the waterway would be subject to a 20% surcharge. He emphasized that this arrangement would establish America as the primary protector of the region.
“The U.S.A. will be, from this point forward, known as ‘THE GUARDIAN OF THE HORMUZ STRAIT,’ but as such, and as a matter of FAIRNESS, will be reimbursed, at the rate of 20% on all cargo shipped, for any and all costs necessary to do the job of providing safety and security to this very volatile section of the World,” Trump wrote in his social media announcement.
Uncertainty Surrounding Fee Calculation
While the proposal captures attention, several practical questions remain unanswered. John McCown, a senior fellow at the Center for Maritime Strategy, highlighted to CNN that potential customers need clarity on pricing before committing to the service. The president’s statement left considerable ambiguity regarding how exactly the 20% figure would be determined.
Mccown posed several possibilities during his analysis. He wondered whether the percentage would apply to the total cost of maintaining a naval blockade, divided among participating vessels. Alternatively, the fee might represent 20% of expenses incurred by the US Navy while escorting commercial ships. Another interpretation suggests the charge could apply to the monetary value of transported goods rather than operational costs.
The White House has yet to provide additional clarification when CNN requested further information. Regardless of the calculation method, mccown expressed skepticism about market acceptance. He noted that shipping operators typically pay between 2% and 3% of their cargo’s value as standard fees, based on his experience as former CEO of Trailer Bridge. A 20% rate would represent approximately ten times the conventional amount, potentially rendering the service financially prohibitive for many operators.
Legal Framework and Historical Precedents
The Strait of Hormuz operates as an international waterway where vessels possess the right of free passage according to established international law. Iran has occasionally implemented what it termed service fees on passing ships, though these charges are not currently active. James Kraska, a professor of international maritime law at the US Naval War College, characterized those Iranian charges as essentially tolls that violate international legal principles.
Kraska offered a different perspective on Trump’s proposal. He interpreted the American president’s statement as offering a voluntary convoy service rather than a mandatory toll. Under this interpretation, shippers could choose whether to participate and pay for protection, which would align with international law. However, Kraska cautioned that legality does not automatically equate to advisability.
“The last time the world faced a situation like this was when Denmark charged foreign vessels for passing through Øresund, from the early 1400s through the mid-1800s. Dues were also assessed on declared cargo value,” said Bjorn Vang Jensen, executive industry adviser at Xeneta, a freight analytics platform.
Jensen further noted an interesting historical irony: the Danish charging practice was ultimately terminated through American diplomatic intervention. This precedent adds another layer to the current debate about maritime fees and international commerce.
Insurance Considerations
Beyond the direct fee question, insurance companies may play a decisive role in determining whether vessels utilize the proposed American protection service. Insurers possess the authority to deny coverage for ships transiting the Strait of Hormuz if they consider security risks excessive. This determination would occur independently of whether ship owners are willing to pay for US protection, potentially forcing participation regardless of cost concerns.
The combination of high fees, legal complexities, and insurance requirements creates a challenging landscape for maritime operators navigating this volatile region. As the situation develops, stakeholders will be watching closely to see how the proposed arrangement unfolds in practice and whether it achieves its intended goal of securing vital trade routes while maintaining international legal standards.