President Trump's proposal to charge a 20% toll on commercial cargo passing through the Strait of Hormuz could generate nearly $200 billion a year for the United States — a sum large enough to cover the compensation of roughly a million federal civilian employees. But the plan, unveiled with characteristic fanfare on Truth Social, faces steep legal, logistical, and diplomatic obstacles that make its actual implementation deeply uncertain.
The Announcement
Trump unveiled the toll plan Monday while simultaneously announcing the U.S. was reinstating its naval blockade on Iranian vessels using the strait. "The U.S.A. will be, from this point forward, known as 'THE GUARDIAN OF THE HORMUZ STRAIT,'" he wrote, "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." He added that "the process and formation will begin immediately," with the reinstated blockade set to take effect Tuesday at 4 p.m.
How Big Could the Windfall Actually Be?
Estimates vary widely depending on methodology, but all point to a genuinely enormous figure. A New York Post analysis, citing data from Exiger CEO Brandon Daniels, put prewar annual trade through the strait at between $880 billion and $970 billion — including roughly $600 billion in crude oil, $80 billion to $120 billion in liquefied natural gas, and another $200 billion to $250 billion in other goods like fertilizer, helium, and hardened polymers. A 20% toll applied to that full volume would generate between $176 billion and $194 billion annually. A more conservative estimate from OilPrice.com, focused narrowly on oil and gas shipments at moderate price assumptions, put the figure closer to $115 billion a year, while a New York Times calculation found the fee could add more than $30 million in cost per ship. The Atlantic Council's Alisha Chhangani and The National both calculated that a single supertanker carrying roughly two million barrels of oil, valued around $170 million at current Brent prices near $85 a barrel, would face a toll of approximately $32 million to $34 million per voyage — dwarfing the roughly $2 million to $4 million in unofficial fees Iran reportedly charged for "safe passage" earlier in the conflict.
A Reversal of the U.S.'s Prior Position
The proposal marks a notable about-face for Washington. Since the conflict began, Iran had signaled its intent to charge its own tolls on ships transiting the strait — a plan the U.S. consistently rejected, arguing the waterway is an international passage entitled to free transit under maritime law. The ceasefire agreement Washington and Tehran signed in mid-June explicitly barred Iran from imposing any such fees. That provision has since been overtaken by the broader collapse of the truce, and Trump has now proposed doing precisely what the U.S. once opposed — this time with America, not Iran, collecting the toll. Secretary of State Marco Rubio had previously described the concept of a Hormuz toll as a "violation" of international law when floated in other contexts, adding another layer of internal inconsistency to the administration's evolving position.
Iran's Response
Iranian Foreign Minister Abbas Araghchi responded to the announcement with a pointed mix of agreement and criticism, posting on X: "Whoever provides secure and safe passage of commercial vessels through the Strait of Hormuz should be compensated for this service... 20 percent is of course too much. We will be fair." Araghchi has separately argued that Iran, not the U.S., has historically served as the strait's guardian, and floated the idea of Tehran charging its own toll at a lower rate than Trump's proposed 20%.
Serious Doubts About Legality and Enforcement
Beyond the eye-catching revenue figures, experts have raised fundamental questions about whether the plan can work at all. The UN's International Maritime Organization has stated there is "no legal basis" for mandatory tolls on natural straits, distinguishing Hormuz from man-made waterways like the Panama Canal — which Trump has cited as a precedent, despite the legal distinction. Kpler's head of Middle East and OPEC+ research bluntly stated, "Twenty per cent is really high. No country has the right to apply tolls on a natural waterway." Chhangani noted the White House "has not explained how the United States would calculate, collect, or enforce a 20 percent transit fee," leaving open basic questions about whether payment would be required before ships enter the strait, whether it would be tied to a naval escort, or how it would be enforced through shipping companies, insurers, banks, or port authorities.
The Real-World Impact on Shipping
Whatever the legal questions, the toll proposal — layered on top of the renewed blockade and ongoing hostilities — has already had a measurable chilling effect on shipping. Gulf vessel crossings dropped from 37 to just 14 in a single week, with some ships reportedly disabling their tracking transponders to avoid detection amid the uncertainty. Analysts widely expect that whatever the fee's ultimate structure, its costs will flow through to producers, refiners, and ultimately consumers worldwide, given how central the strait remains to global energy trade.
An Unintended Climate Angle
In an unexpected twist, some energy analysts have pointed out that a sustained 20% levy on Gulf oil and gas shipments could function as an inadvertent carbon tax, given the strait carries roughly a fifth of global daily oil shipments. OilPrice.com argued that by making Gulf energy structurally more expensive and legally contested, the policy could end up accelerating the shift toward renewables and electrification more than many deliberate climate policies — an outcome that would run directly counter to the administration's broader energy agenda, which has included withdrawing from the Paris Agreement and constraining support for clean energy projects.