President Trump scrapped his own 24-hour-old plan to charge a 20 percent fee on cargo passing through the Strait of Hormuz, announcing instead that Gulf states would make major direct investments in the United States. The reversal came amid pressure from Middle Eastern allies and unfolded against the backdrop of a collapsing ceasefire with Iran and surging global oil prices. The whiplash policy shift highlights how volatile the administration’s approach to the critical waterway has become.
Story Highlights
- Trump proposed a 20 percent “reimbursement fee” on Strait of Hormuz cargo Monday, then scrapped it Tuesday
- The fee was meant to offset costs of U.S. military operations securing the waterway
- Gulf states will instead pursue unspecified “trade and investment deals” with the U.S., Trump said
- The reversal came as oil prices surged more than 9 percent amid renewed U.S.-Iran hostilities
What Happened
President Trump announced Monday that the United States would begin charging commercial shippers a fee equal to 20 percent of their cargo’s value to transit the Strait of Hormuz, framing it as reimbursement for American naval operations protecting the waterway. The proposal arrived as the U.S. reinstated a blockade on Iranian ports and resumed airstrikes on Iranian military targets, positioning Washington as what Trump called the “guardian” of the strait. The announcement immediately drew objections from Gulf allies who rely heavily on unimpeded shipping through the passage, which normally carries roughly a fifth of the world’s traded oil and gas.
By Tuesday, Trump reversed course entirely. In a Truth Social post, he said that after “highly productive conversations with Middle East leadership,” he had decided to replace the reimbursement fee with trade and investment commitments from Gulf states, which he described as “MASSIVE” without specifying amounts or which countries were involved. He maintained that the strait would remain open to all shipping except vessels tied to Iran, and that the U.S. blockade would apply only to ships traveling to or from Iranian ports or carrying Iranian cargo.
The about-face occurred alongside a broader escalation. U.S. Central Command carried out additional strikes on Iranian coastal defense systems, missile sites and drone facilities, while Iran targeted commercial vessels and U.S. allies including Jordan, Bahrain and the United Arab Emirates. Two tankers associated with the UAE were struck and set ablaze, killing one crew member and wounding eight others. The Treasury Department separately imposed new sanctions targeting an Iranian shipping network described as central to Tehran’s oil exports.
Why It Matters
The rapid reversal underscores the fragility of U.S. policy toward one of the world’s most economically significant chokepoints. A fee of that magnitude would have functioned as a substantial tax on global trade, given that a large share of Gulf oil and liquefied natural gas exports depend on the strait remaining passable. Shipping companies, insurers and energy traders had barely begun assessing the fee’s implications before it was withdrawn, adding to an already turbulent operating environment for firms navigating the region.
For Gulf allies, the episode illustrates the leverage they retain over Washington despite their reliance on American military protection. Their swift pushback and Trump’s quick capitulation suggest the administration is wary of alienating partners whose cooperation is essential both militarily and economically, even as it pursues an aggressive posture toward Iran.
Economic and Global Context
Oil markets reacted sharply to the surrounding turmoil. Brent crude surged 9.59 percent to settle at $83.30 per barrel, its highest level since mid-June, marking its largest single-day percentage gain in more than six years. West Texas Intermediate rose roughly 9.4 percent to $78.14 per barrel. Prices remain well below the peaks above $110 per barrel reached earlier in the broader Iran conflict, but analysts warned that continued disruption to the strait would keep upward pressure on inflation and interest rate expectations.
Commercial shipping traffic through the strait, already suppressed well below prewar levels even during the ceasefire, dropped further as hostilities resumed, according to ship-tracking data. Before the war began in February, roughly 20 percent of global oil and gas shipments passed through the corridor. The scrapped fee, had it taken effect, would have compounded those disruptions by adding a direct cost to shippers already contending with insurance premiums inflated by war risk.
Implications
Looking ahead, the details of the promised Gulf investment deals remain entirely unspecified, and it is unclear whether they represent new commitments or a repackaging of pledges made during Trump’s earlier visits to the region. Markets and allied governments will be watching closely for concrete agreements in the coming weeks.
For the shipping and energy industries, the episode adds another layer of unpredictability to an already volatile corridor, complicating route planning and insurance pricing. For policymakers, the swift reversal may invite further Gulf pressure on other aspects of U.S. Iran policy, including the blockade itself. And for Iran, the failure of the fee to materialize does little to change its calculus, as Tehran has signaled it will not initiate new negotiations and blames Washington for the ceasefire’s collapse.
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