US President Donald Trump's proposal to charge a 20% fee for American protection of ships transiting the Strait of Hormuz has triggered debate over whether such a plan is legally permissible, or commercially viable.
As shipping companies seek stronger security following the US-Israeli conflict with Iran, Trump on Monday offered the US as what he called the "Guardian of the Hormuz Strait".
"The U.S.A. will be, from this point forward, known as 'THE GUARDIAN OF THE HORMUZ STRAIT,' but... will be reimbursed, at the rate of 20% on all cargo shipped," Trump wrote in a Truth Social post.
The proposal, however, leaves key questions unanswered, including how the 20% fee would be calculated.
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CNN reported that John McCown, senior fellow at the Center for Maritime Strategy, said that the pricing mechanism is entirely unclear. "Is it 20% of what our cost on the blockade is, somehow divided by the number of ships?" McCown said.
He said the charge could alternatively be linked to the US Navy's escort costs or even the value of cargo being transported. Even if the plan were implemented, McCown questioned whether anyone would be willing to pay.
According to him, shippers typically pay carriers about 2-3% of the value of their cargo in freight charges. A 20% levy would be several times higher and likely unaffordable for most operators.
Insurance companies could also become the deciding factor. If insurers conclude that security risks in the Strait remain too high, they could refuse coverage regardless of whether shipowners opt for US naval protection. The proposal has also raised legal questions.
The Strait of Hormuz is an international waterway where vessels enjoy the right of free passage under international law. While Iran has imposed service charges on ships in the past, those fees are currently not in effect.
James Kraska, professor of international maritime law at the US Naval War College, told CNN that mandatory tolls for passage would not be permitted under international law.
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However, he interpreted Trump's proposal differently. "We're going to convoy vessels through here, and if you want to join, here's the cost."
According to Kraska, such an arrangement would be lawful because participation would be voluntary rather than a condition for passage through the waterway. Still, he cautioned that legal permissibility does not necessarily make it good policy.
Bjorn Vang Jensen, executive industry adviser at freight analytics platform Xeneta, noted that history offers a similar example.
"The last time the world faced a situation like this was when Denmark charged foreign vessels for passing through Øresund... Ironically, that practice was stopped by American intervention," he said.
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