Trump withdraws Strait of Hormuz transit fee as US prepares to reinstate Iran blockade
The US President replaces a proposed 20 per cent toll with a demand for substantial trade deals from Gulf States, even as a naval blockade set to resume threatens a fragile mid-June ceasefire.
US President Donald Trump has withdrawn a proposed 20 per cent transit fee for vessels passing through the Strait of Hormuz, reversing an announcement made just one day prior. The reversal occurred on Tuesday as military hostilities between the United States and Iran intensified, with the US military blockade of Iran, previously suspended under a mid-June memorandum of understanding, set to resume.
The administration has replaced the fee with a proposal for Gulf States to enter into substantial trade and investment deals with the United States in exchange for transit protection. Trump stated on Tuesday that the fee would be replaced by "Trade and Investment Deals" resulting from "highly productive conversations with Middle East leadership." He vowed that investments from Gulf countries would be "massive," though no specific figures or details were provided.
The policy shift follows a period of significant uncertainty regarding the governance of the international waterway. The US does not control the Strait of Hormuz, raising questions about how safe passage would be enforced under the previous fee proposal. While Trump had previously suggested the US could take "control" of the strait and charge tolls as a reimbursement for security costs, he appeared to return to a stance opposing such levies on Tuesday, telling reporters he does not "like the concept of a fee."
This position aligns with previous US statements rejecting Iranian fees in international waterways. US Secretary of State Marco Rubio had previously argued that such charges would undermine international law. The reversal was announced via a post on Truth Social, where the President declared that the critical waterway remains open to all ship traffic with the exception of Iran.
Regional tensions remain high as the preliminary deal signed in mid-June, which ended fighting and lifted the blockade, is thrown into peril. Iranian media have reported explosions on Qeshm and Kish islands, as well as attacks in Bushehr, Bandar Abbas, Mahshahr, and Abadan. Kuwait announced its armed forces were engaging with aerial targets, while other attacks were reported on Bahrain, Jordan, and vessels in the Strait of Hormuz.
Crude oil prices have reached four-week highs due to ongoing missile activity and tensions in the region. The US prepares to reinstate the naval blockade on Iranian ports at 16:00 Eastern Time on Tuesday. Several Gulf countries had already announced multibillion-dollar investment pledges in the US prior to the US and Israel launching their war with Iran on 28 February.
