The strait is not a sideshow

According to CNBC, President Trump has announced that Iran has assured the United States there will be no tolls, insurance costs, or charges of any kind for vessels passing through the Strait of Hormuz. Take the good news where it arrives. Roughly one-fifth of the world's seaborne oil transits that narrow channel. Any threat to levy passage fees — or to make insurers price the risk as though such fees were imminent — is a tax on every manufacturer, every refinery, every household that heats with petroleum. The president was right to press the point.

A word is not a bond

And yet. I spent my years at the Treasury arguing, often against comfortable opposition, that public credit rests not on promises alone but on instruments — bonds, contracts, treaties — that bind parties across changes of mood and government. A verbal assurance conveyed through diplomatic channels is better than silence, but it is not a treaty. Iran's government has changed its posture before; it may change it again. The freight markets and the insurance underwriters know this, and they will price the residual risk accordingly until something more durable is on paper.

Commerce abhors uncertainty more than it abhors cost

This is the point that every merchant has understood since commerce began: a known cost, even a high one, is preferable to an uncertain cost. A toll one can calculate; a threat one cannot. If shipping lanes are unsettled — if insurers must price a scenario in which the assurance evaporates tomorrow — then the cost of energy and manufactured goods rises quietly, invisibly, without a single tariff schedule being published. That hidden tax is the most pernicious kind, because no legislature votes on it and no court reviews it.

The industrial base is downstream of this strait

I was, in my own time, the architect of a report on manufactures that argued American productive capacity must be nurtured and defended as a matter of national policy. The principle carries forward with full force. American semiconductors, American steel, American chemicals — all depend on energy inputs whose price is shaped by what happens in that narrow body of water. An interruption there is not a foreign-policy abstraction; it is a disruption to the domestic industrial base I have always argued must be kept vigorous.

What I would recommend

The administration should treat this assurance as a floor, not a ceiling. Convert it into a written commitment — ideally multilateral, with Gulf partners and major trading nations as co-signatories — that can be held to account in international forums. Commission the Treasury and the relevant commerce agencies to model the insurance cost differential between the current verbal pledge and a formalized instrument: that gap, expressed in dollars per barrel, is the price the American economy is still paying for incompleteness. And maintain — do not reduce — the naval presence that gives the assurance its practical weight. An energetic government does not simply accept a promise; it builds the architecture that makes keeping the promise the easier path.