Trump offers US protection in the Strait of Hormuz for a 20% fee. How would that work?
Trump Proposes 20% Cargo Fee for Strait of Hormuz Protection
Trump offers US protection in the Strait – Following the outbreak of hostilities between the United States, Israel, and Iran, maritime operators have been urging enhanced security measures for ships navigating the Strait of Hormuz. This vital shipping corridor, which Iran maintains control over, has become increasingly dangerous for commercial vessels. President Donald Trump has now stepped forward with a solution, though it comes with a substantial price tag. According to the president, American forces will safeguard maritime traffic through this strategic passage, but shipping companies must contribute 20 percent of their cargo value toward the effort.
“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 declared in a Truth Social message posted on Monday.
While the announcement has generated considerable attention, it has also sparked numerous questions regarding both legal standing and practical implementation. John McCown, a senior research fellow at the Center for Maritime Strategy, emphasized that potential customers need clarity on pricing before committing to the service. McCown, who previously served as chief executive officer of Trailer Bridge, a shipping logistics firm, noted that Trump’s social media statement left several details ambiguous.
“Is it 20% of what our cost on the blockade is, somehow divided by the number of ships?” McCown asked, highlighting the uncertainty surrounding the calculation methodology. Several interpretations remain possible. The fee could represent 20 percent of the United States Navy’s total escort expenses, or it might equal 20 percent of the declared value of transported merchandise. The White House has yet to provide additional clarification when CNN requested further information on the matter.
McCown expressed skepticism that the proposed rate would prove acceptable to most stakeholders. Under normal circumstances, maritime operators typically pay between two and three percent of their cargo’s worth as fees to carriers. A twenty percent charge would represent roughly ten times the standard rate, potentially making the service prohibitively expensive for many shippers. Nevertheless, insurance companies may ultimately determine whether the arrangement succeeds or fails. If insurers consider the security threats in the region too severe, they might decline to cover vessels regardless of whether shipowners are prepared to purchase American protection.
Legal Framework and Historical Precedents
The Strait of Hormuz operates as an international waterway, granting vessels the right of free passage according to established international law. Iran has occasionally levied what it termed service fees on passing ships, although these charges are not currently active. James Kraska, a professor specializing in international maritime law at the US Naval War College, characterized those Iranian charges as essentially tolls. He explained that such mandatory fees violate international legal principles.
His read of Trump’s post is that the United States is saying: “We’re going to convoy vessels through here, and if you want to join, here’s the cost.”
Kraska suggested that Trump’s approach could align with international law because participation would remain voluntary. Unlike Iran’s previous system, which effectively blocked cargo from transiting unless fees were paid, the American proposal would allow shippers to choose whether to purchase protection. However, Kraska cautioned that legality does not automatically equate to advisability.
Bjorn Vang Jensen, executive industry adviser at the freight analytics platform Xeneta, pointed to a historical parallel that might inform expectations. “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,” Jensen explained. He noted that this European practice eventually came to an end following American diplomatic intervention, suggesting that while the concept has precedent, its long-term viability remains uncertain.
