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Trump's Hormuz Tariff Plan Could Double Shipping Costs, Worrying Industry
🇬🇷 Greece /Economy & Trade

Trump's Hormuz Tariff Plan Could Double Shipping Costs, Worrying Industry

From Ta Nea · () Greek

Translated from Greek, summarized and contextualized by DistantNews.

At a glance

News Named sources Context piece
  • A proposed 20% U.S. tariff on cargo passing through the Strait of Hormuz could double shipping costs for oil and other goods.
  • The tariff aims to cover U.S. military protection for commercial vessels, but analysts warn it will increase costs for consumers.
  • Shipping companies face a dilemma between paying the U.S. tariff and risking attacks, or defying U.S. demands amid regional tensions.

A proposed 20% U.S. tariff on all cargo transiting the Strait of Hormuz is causing significant concern within the international shipping industry. U.S. President Donald Trump stated the fee would cover the cost of American military protection for commercial ships. However, industry analysts and market executives predict the measure, if implemented, would dramatically increase the cost of transporting oil and other commodities, ultimately passing the burden onto consumers.

If it is implemented, owners will face a difficult dilemma: either pay the high fee proposed by the US, while also taking on the risk of attack from Iran, or ignore the American demands and comply with Tehran's directives.

— Neil CrosbyNeil Crosby, head of oil research at energy analysis firm Sparta, on the difficult choices shipowners would face if the proposed tariff is implemented.

The exact calculation of the 20% fee remains unclear. If applied to the cargo's value, the cost of shipping a barrel of oil through the Strait of Hormuz could more than double. Rico Luman, a senior economist at ING Research specializing in transport and supply chains, estimates that shipping a barrel of oil from the Persian Gulf to Europe currently costs about $10. With oil priced at roughly $80 per barrel, a 20% tariff would add another $16, bringing the total shipping cost to $26 per barrel. For a supertanker carrying two million barrels, this would mean an additional cost exceeding $30 million per voyage.

Oil importers are unlikely to absorb such increased costs, meaning a portion will likely be reflected in fuel prices and other products. This concern is amplified by ongoing tensions between the United States and Iran over control of shipping in the Strait of Hormuz, a vital waterway that handled about 20% of global oil before recent conflicts. Neil Crosby, head of oil research at energy analysis firm Sparta, expressed skepticism about the measure's implementation but noted that shipowners would face a difficult choice if it proceeds: pay the high U.S. tariff while risking Iranian attacks, or ignore U.S. demands and comply with Tehran's directives. He added that this proposal, combined with recent regional attacks, makes shipowners increasingly hesitant to operate in the Strait of Hormuz.

the proposed fee is 'exorbitant'

— anonymous shipping officialsTwo anonymous shipping officials described the proposed fee.

Two anonymous shipping officials described the proposed fee as "exorbitant," exceeding even their own companies' charges for transporting cargo through the region. Vidya Mani, an associate professor at the University of Virginia and supply chain expert, called the 20% burden "particularly significant." She recalled that...

the 20% burden is 'particularly significant'

— Vidya ManiVidya Mani, an associate professor at the University of Virginia and supply chain expert, on the proposed tariff.
DistantNews Editorial

Originally published by Ta Nea in Greek. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

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