President Donald Trump abandoned his plan to charge a 20 percent fee on cargo ships transiting the Strait of Hormuz on Tuesday, reversing himself one day after announcing the measure.
The fee was meant to cover what Trump called the cost of protecting the world’s most important oil shipping lane. Instead, he said Gulf nations would make “massive” trade and investment commitments to the United States.
“Based on highly productive conversations with Middle East leadership, I have decided to replace the 20% United States Reimbursement Fee with Trade and Investment Deals that the various Gulf States will be making into the United States,” Trump wrote on social media.
The about-face came hours after the US reinstated a full naval blockade on Iranian shipping in the Gulf and launched a third consecutive night of strikes on Iran. The fragile ceasefire that had paused the war collapsed over the weekend after both sides exchanged missile and drone attacks.
The Strait of Hormuz is the strategic chokepoint through which about a fifth of the world’s traded crude oil and natural gas passed in peacetime. Iran effectively shut it during the war by attacking and threatening commercial vessels, a tactic that proved its greatest strategic advantage.
Trump had argued on Monday that the 20 percent fee was necessary because “we’re protecting a very rich portion of the world.” By Tuesday, the calculus had changed.
The reversal came amid sharp criticism of the plan. Risk analysts called it unworkable. Iran’s Foreign Minister Abbas Araghchi said Trump was “absolutely right” to demand compensation for protecting the Strait, but insisted Iran was its rightful guardian. Critics pointed out that Secretary of State Marco Rubio himself had said in June that “no country is allowed to charge tolls or fees on an international waterway.”
Whether the promised Gulf investment deals are new commitments or repackaged agreements from Trump’s Middle East trip last year remains unclear. The president said the investments “will be MASSIVE” but provided no details.
The practical effect of dropping the fee is limited. The blockade on Iranian shipping remains in place. The US is still striking Iran. Oil prices pushed past $80 a barrel for West Texas Intermediate, and Brent crude hit $86.62. GasBuddy analyst Patrick De Haan predicted the national average price of gasoline would reach $4 a gallon within days.
The fee plan was a one-day idea. The war is not.
Source: Al Jazeera, AP, BBC, KSBY/AP, Benzinga