The United States government has for decades levied fees on shipping through certain strategic waterways, but the current proposal to impose a transit fee on the Strait of Hormuz would represent a departure from all previous practice. No earlier administration had ever advanced a plan to toll a waterway that lies outside American territorial control, a distinction that places the proposal in uncharted legal and diplomatic territory.
The United States has a direct historical connection to toll-collection at one major chokepoint: the Panama Canal. Opened in 1914, the canal has charged fees based on ship size and cargo since its inception, with rates set by the Panama Canal Authority. The Torrijos-Carter Treaties of 1977 transferred operational control of the waterway to Panama by 1999, formally ending American authority over its management and toll structure.
Since that transfer, the United States has not attempted to levy any transit fee on the Panama Canal. The Suez Canal, opened in 1869 and operated entirely by Egypt, provides another comparison.
Egyptian authorities collected $9.4 billion in toll revenue from the Suez Canal in fiscal year 2022-2023. The Panama Canal Authority sets its own rates independently, and those tolls have generated periodic friction with shipping lines. Both canals function as national assets run by the sovereign state that controls them. Against that backdrop, the proposed Hormuz fee stands alone: no prior administration put forward a toll for a waterway without American ownership or operational authority.
The Strait of Hormuz and the Fifth Fleet’s Long Mission
The Strait of Hormuz connects the Persian Gulf with the Gulf of Oman and the wider Indian Ocean. Its geography makes it the single maritime passage for seaborne energy exports from several Gulf producers, giving it an outsized role in global oil markets. The United States Navy has maintained a steady patrol presence in the strait since 1949 under what became the U.S. Fifth Fleet, headquartered in Bahrain.
That military deployment has been consistently framed as a mission to keep the chokepoint open for international shipping, focused on deterring interference with commercial vessels. Over more than seven decades, that presence never translated into any suggestion of a transit fee or tolling authority.
The Fifth Fleet’s mission has been about freedom of navigation, not revenue collection. A toll would therefore represent a fundamental shift in how the United States views its role in that waterway. The current proposal breaks with that entire history, even though no earlier administration had proposed a transit fee for the Strait of Hormuz.
Legal Hurdles and Implications for Global Shipping
The proposal confronts significant legal and diplomatic obstacles. International law generally recognizes that coastal states hold sovereignty over their territorial waters, but the Strait of Hormuz includes areas designated as international waters where the principle of freedom of transit passage applies. The exact method by which the United States would enforce such a fee remains unspecified, and how Gulf states such as Iran and Oman would respond remains an open question.
The practical significance for global shipping and energy supplies is direct. If the United States can impose a transit fee on a waterway it does not control, that could set a precedent applicable to other strategic chokepoints around the world.
The Panama Canal and Suez Canal both operate under clear national ownership by a single sovereign authority. The Strait of Hormuz does not. It was never built as a tolled artificial channel; it lies in coastal waters claimed by Iran and Oman, and its transit is governed by customary maritime law rather than any canal authority’s published tariff schedule.
Past administrations consistently treated free passage through the strait as a strategic objective, not as a source of revenue. Any move to charge for transit across a shared international strait would depart from long-standing practice.
It would raise new questions about the limits of naval presence and the rights of coastal states. Global shipping routes and energy supplies could face new uncertainty if the legal precedent shifts, making this proposal a matter of consequence well beyond the waters of the Persian Gulf.
