U.S. President Donald Trump walked back within a day his plan to impose a toll equal to 20% of the value of cargo loaded on civilian ships transiting the Strait of Hormuz, but concern is growing in the shipping industry that the controversy could spur other countries to try to monetize international straits.
Trump said on the 13th (local time) that the United States would levy a toll in return for the U.S. military protecting merchant ships passing through the Strait of Hormuz. But after a wave of criticism from the international community, he effectively reversed course the next day, announcing, "As a result of very productive conversations with Middle Eastern leaders, we have decided to replace the U.S. 20% compensation fee with trade and investment agreements concluded with Gulf countries."
On the 14th, Bloomberg News reported, "The prospect of imposing a toll in the Strait of Hormuz is again highlighting how vulnerable the global supply chain is to a handful of strategic maritime chokepoints," adding, "There is also growing concern that such a move could set a precedent that changes the way international straits are managed." The point is that Trump's remarks themselves could shake the operating principles of the world's major straits.
On the same day, the New York Times (NYT) also said, "Trump's reversal shows how far the debate over the Strait of Hormuz, a key maritime corridor in the Middle East, has strayed from established international shipping practices," and added, "As U.S.-Iran tensions again edge toward a war footing, corporations doing business in the region are facing great uncertainty."
International law guarantees the right of transit passage in straits used for international navigation and bars coastal states from charging tolls merely for exercising that right. The Strait of Hormuz, too, was an international route where ships traveled freely without additional expense until war broke out with Iran.
However, international law does allow charges for "specific services provided to ships." Trump's claim to collect a toll in return for U.S. military escorts is seen as grounded in this logic.
Although the toll plan was withdrawn, the very fact that the United States, which has emphasized freedom of navigation in the Strait of Hormuz, changed its stance is fueling industry anxiety. The Malacca Strait, which connects the Indian and Pacific oceans, and the Turkish Straits, the only natural maritime passage linking the Black Sea and the Mediterranean, are also cited as areas where similar disputes could erupt if geopolitical conflicts arise.
Jakob Larsen, head of safety and security at the Baltic and International Maritime Council (BIMCO), the world's largest shipowners' association, noted that Trump's idea could increase the likelihood that other countries bordering straits will move to seek revenue from international sea lanes. He said, "The more statements that undermine international norms are repeated, the weaker those norms themselves will inevitably become."
Lasse Kristoffersen, chief executive officer (CEO) of Norway-based car shipping and logistics company Wallenius Wilhelmsen, also said, "If the principle of freedom of navigation is violated even once, other countries may be tempted to try the same," adding, "This is precisely why we value this principle above all."
Indeed, immediately after Trump's toll remarks, Iran used them to justify its own toll argument. Iranian Foreign Minister Abbas Araghchi said on social media (SNS), "The U.S. president is absolutely right. Whoever ensures the safe passage of merchant ships in the Strait of Hormuz should be compensated for that service," adding, "Of course, 20% is excessive. We will be fair."
It remains unclear when the uncertainty facing corporations using the Strait of Hormuz will be resolved. Trump said he would guarantee safe navigation for ships from Gulf countries that invest in the United States, which, conversely, can be read as leaving open the possibility of imposing expense in the future on ships from countries that do not invest. CEO Kristoffersen said, "The very fact that the situation keeps changing makes it hard to decide whether trade can return to normal."