In a dramatic escalation of U.S. demands on allies, President Donald Trump has recently called for Egypt to waive all tolls for U.S. Navy and commercial vessels transiting the Suez Canal—an appeal that has raised eyebrows in Cairo and stirred debate in Washington. The timing of the request could not be more complex. It comes amid mounting instability in the Red Sea, where Iran-backed Houthi militants continue to target shipping vessels with impunity, drawing the U.S. military deeper into a volatile regional conflict.
The U.S.-Egypt relationship, historically anchored in military cooperation and strategic interests, now finds itself under renewed pressure. Egypt is grappling with a sharp decline in Suez Canal revenues, directly tied to the fallout from Red Sea hostilities. At the same time, the Trump administration’s aggressive posture—demanding “free passage” through the canal—risks complicating ties with a partner that remains vital for regional navigation and counterterrorism coordination.
Trump’s Demands and Egypt’s Economic Dilemma
In early April 2025, President Trump reportedly instructed Secretary of State Marco Rubio to press Egypt and Panama to grant free transit to American ships, both military and commercial. During a phone call with Egyptian President Abdel Fattah el-Sisi, Trump insisted that the Suez Canal “wouldn’t exist without the U.S.” and should therefore be opened toll-free for American use. These remarks, while consistent with Trump’s transactional approach to diplomacy, struck a nerve in Cairo, where Suez Canal tolls represent a key pillar of Egypt’s foreign currency reserves.
According to the Egyptian government, Suez Canal revenues fell nearly 65% year-on-year in 2024, largely due to rerouted shipping traffic avoiding the Red Sea amid Houthi drone and missile attacks. Egypt, already facing economic headwinds, cannot afford further losses to this strategic income stream. Analysts suggest that granting Trump’s request would not only strain Egypt’s finances but set a precedent that could encourage similar demands from other global powers.
The Red Sea Crisis
The backdrop to these developments is a widening security crisis in the Red Sea. Since November 2023, Yemen’s Houthi rebels—aligned with Iran—have launched a wave of attacks on international shipping. These include drone strikes, anti-ship ballistic missile launches, and even direct boarding of vessels. Their stated justification: disrupting trade linked to Israel in response to the war in Gaza.
The impact on global shipping has been profound. Major carriers have diverted vessels around the Cape of Good Hope, bypassing the Suez Canal entirely. Insurance premiums for Red Sea transits have surged, and port activity from Djibouti to Jeddah has sharply declined. The disruption has not only cut into Egypt’s canal income but has also exposed the fragility of maritime supply chains in the face of asymmetric warfare.
In response, the U.S. launched Operation Rough Rider in March 2025, a broad campaign of airstrikes and naval patrols aimed at degrading Houthi capabilities. The operation, supported in part by the United Kingdom, has struck drone factories and missile sites across Yemen. Despite these efforts, the Houthis continue to threaten commercial and naval assets, raising fears that the conflict could widen into a direct U.S.-Iran proxy war.
Suez and Strategic Access
The Suez Canal remains one of the world’s most critical chokepoints, connecting the Mediterranean to the Red Sea and drastically reducing transit time between Europe and Asia. For the U.S. Navy, it serves as a key artery for rapid deployment between the Fifth and Sixth Fleets. Losing preferential or affordable access would impose logistical challenges on U.S. military operations across the Middle East, North Africa, and the Indian Ocean.
The Trump administration’s current stance appears rooted in the belief that America’s global security footprint justifies special privileges. Yet Egypt sees things differently. From Cairo’s perspective, the canal is not a gift to the world—it’s a sovereign asset, rebuilt and expanded at tremendous national cost. President Sisi, facing both domestic economic pressure and international scrutiny over human rights, may see little political advantage in yielding to Trump’s request without concessions.
Balancing the Relationship
While U.S.-Egypt military cooperation remains robust—with joint exercises like Bright Star and billions in U.S. military aid annually—the growing strain is undeniable. Trump’s rhetoric, combined with Egypt’s economic vulnerabilities, creates a volatile mix. Cairo’s recent pivot to deepen ties with China and Russia adds another layer of complexity to a relationship Washington once viewed as immovable.
The larger concern, however, may be how this dispute signals a broader shift in U.S. foreign policy. Trump’s transactional diplomacy—demanding favorable terms from allies without offering tangible benefits in return—risks alienating partners at a time when Washington is already stretched thin managing tensions with China, Iran, and Russia. The situation in the Red Sea, and the parallel crisis in Gaza, requires careful coalition-building. Undermining a key partner like Egypt could backfire strategically.
Looking Ahead
As the U.S. deepens its military engagement in the Red Sea and seeks to protect global shipping lanes, the importance of Egyptian cooperation will only grow. Trump’s push for toll-free Suez access may appeal to domestic audiences, but the long-term consequences of alienating Egypt could be severe—both diplomatically and operationally.
For now, Cairo appears to be weighing its options carefully. But if Suez toll revenue continues to plummet, and if Red Sea instability persists, Egypt may be forced to assert its interests more forcefully—perhaps even at odds with Washington. In this new era of multipolar competition and regional volatility, the old assumptions about U.S. influence no longer apply. And in the waters between Suez and Bab el-Mandeb, power is being contested ship by ship.
