President Trump unexpectedly cancels the Strait of Hormuz toll.
The US president decided to cancel the plan to impose a 20% fee on the Strait of Hormuz, shifting instead to trade agreements with the Gulf region after a sudden surge in oil prices.
According to AFP, US President Donald Trump unexpectedly canceled plans to impose a 20% tariff on ships passing through the Strait of Hormuz amid tensions with Iran. Instead, Trump announced he would seek compensation from Gulf allies through trade and investment agreements. The decision to cancel the Strait of Hormuz fee was based on effective discussions with Middle Eastern leaders, who persuaded him to change his stance just one day after the announcement.
On the social media platform Truth Social on July 14th (Washington time), Mr. Trump affirmed his opposition to charging any fees on this vital waterway. Therefore, the 20% rebate from the US would be replaced by investment flows from Gulf nations. However, the US leader emphasized that he would continue to apply a comprehensive blockade on ships entering and leaving Iranian ports, as well as all cargo ships related to that country.
Previously, Iran had virtually blockaded the entire Strait of Hormuz, a vital waterway for the global oil and gas industry, after the US and Israel attacked Iran in late February. The route began to reopen after a ceasefire agreement in June but once again became the focus of military action when the ceasefire effectively broke down last week.
On July 13, President Trump declared that the U.S. was the protector of the Strait of Hormuz and intended to impose large shipping fees to offset security costs. This vague announcement immediately caused oil prices to surge and alarmed allies, especially given the U.S.'s previous strong criticism of Iran's intention to charge shipping fees through the region.
The policy reversal came after the US president held direct talks with the leaders of Saudi Arabia, the United Arab Emirates, Qatar, Bahrain, and Kuwait. While hosting the new Iraqi prime minister in the Oval Office, Trump shared that the Gulf monarchs had proposed investing billions of dollars in the US instead of paying tolls through the Strait. While agreeing that no one should be allowed to collect fees on the waterway, he argued it would be unfair if the US were not compensated in some way.
On the Iranian side, the country's military command is adamant about not allowing the US to interfere in the strait. Tehran has also issued a stern warning to its Gulf neighbors not to cooperate with Washington to avoid suffering the consequences of retaliation.
This isn't the first time the 80-year-old president has reversed a tough statement on trade. Last year, President Trump also eased global tariffs after financial markets were shaken.