Trump offers US protection in the Strait of Hormuz for a 20% fee. How would that work?

Trump’s Bold Proposal: 20% Fee for American Naval Protection in Hormuz

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 strategically vital Strait of Hormuz. This narrow waterway, currently under Iranian influence, serves as a crucial artery for global commerce. President Donald Trump has now stepped forward with an ambitious solution, proposing that American forces will safeguard commercial traffic through this contested passage—provided shipping entities agree to a substantial 20% surcharge on all cargo passing through.

In a message published on his Truth Social platform on Monday, the former president declared that America would henceforth be recognized as “THE GUARDIAN OF THE HORMUZ STRAIT.” He emphasized that this protective role would come with financial compensation, stating that the United States would receive reimbursement at a rate of 20% on every shipment to cover all expenses related to maintaining safety and security in what he described as “this very volatile section of the World.” The announcement has sparked considerable debate regarding both the practical implementation and legal standing of such a fee structure.

Uncertainty Surrounding Fee Calculation

One of the primary concerns raised by maritime experts involves determining the exact methodology for calculating this proposed surcharge. John McCown, a senior fellow at the Center for Maritime Strategy, highlighted to CNN that potential customers require clarity before committing to the service. According to McCown, Trump’s announcement left several critical questions unanswered regarding how the percentage would be applied in practice.

“Is it 20% of what our cost on the blockade is, somehow divided by the number of ships?” McCown questioned, illustrating the ambiguity surrounding the proposal.

Several scenarios present themselves for how this fee might operate. The charge could represent 20% of the total expenses incurred by the US Navy while escorting commercial vessels through the strait. Alternatively, it might constitute 20% of the declared value of the cargo itself. The White House has yet to provide additional clarification following CNN’s inquiry for more specifics on the matter.

Financial Burden on Shipping Industry

McCown, who previously served as CEO of the shipping logistics firm Trailer Bridge, expressed skepticism about the commercial viability of such a steep fee. He noted that under normal circumstances, maritime operators typically pay carriers between 2% and 3% of their cargo’s value as standard fees. A 20% charge would represent approximately ten times the conventional rate, potentially rendering the service prohibitively expensive for many shippers.

However, insurance companies may ultimately hold significant influence over whether this arrangement gains traction. These financial institutions possess the authority to deny coverage to vessels attempting to navigate the Hormuz Strait if they consider the security risks excessive. This determination could occur independently of whether ship owners are willing to absorb the American protection fee.

Legal Framework and International Precedent

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 transiting ships, though these charges are not currently active. James Kraska, a professor specializing in international maritime law at the US Naval War College, characterized these Iranian charges as effectively functioning as tolls—a practice he maintains violates international legal standards.

Kraska interpreted Trump’s announcement as the United States offering a voluntary convoy service with an associated cost for participation. This approach would align with international law because it allows shippers to make a choice regarding whether to purchase protection, rather than imposing a mandatory fee that could prevent cargo from transiting. Nevertheless, Kraska cautioned that legal permissibility does not automatically equate to practical 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 the irony that this historical Danish practice was eventually terminated through American diplomatic intervention, suggesting that similar outcomes might be possible in the current scenario. The combination of legal considerations, economic factors, and historical precedent will likely shape how this proposal evolves in the coming months as global shipping continues to adapt to the changing security landscape in the Persian Gulf region.