Trump Drops 20% Hormuz Fee, Turns to Gulf Investment

Donald Trump’s withdrawal of the proposed 20% cargo fee eases immediate pressure on carriers, but conflict, Iranian trade restrictions, and oil volatility continue to threaten Hormuz shipping.

US President Donald Trump abandoned a proposal to charge a 20% fee on cargo moving through the Strait of Hormuz, replacing it with plans to negotiate trade and investment agreements with Gulf countries as military tensions continue to disrupt shipping and energy markets.

The reversal came one day after Trump announced that the United States would seek reimbursement equivalent to 20% of all cargo transported through the strategic waterway. The proposed charge was intended to cover the cost of US operations to keep the strait open and protect commercial navigation.

As previously reported by MBN, the initial announcement raised immediate legal, commercial, and inflationary concerns. Oil prices surged as renewed military exchanges between the United States and Iran increased fears of supply disruptions in one of the world’s most important energy corridors. The proposal also created uncertainty over how the fee would be calculated, collected, and enforced across international shipping operations.

On July 14, Trump said the proposed “United States Reimbursement Fee” would instead be replaced by investment and trade agreements with Gulf 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 Truth Social.

Trump said the investments would be “massive” and beneficial to the countries involved. However, he did not identify which Gulf states had committed to participate, the value of the potential agreements, or when the investments would be made.

The policy shift removes the immediate prospect of a broad cargo charge for vessels using the Strait of Hormuz. However, it does not end US efforts to restrict Iranian maritime trade.

Iran Blockade Remains in Place

Trump said the Strait of Hormuz would remain open to most international shipping, while vessels connected to Iran would continue to face restrictions. “We will therefore have a FULL Blockade, but only on Ships coming to and from Iranian ports, or carrying anything have to do with Iranian cargo,” he wrote.

The distinction means ships carrying non-Iranian cargo would no longer face the proposed 20% US charge, while vessels traveling to or from Iranian ports, or transporting Iranian goods, could still be intercepted.

Trump had announced the reinstatement of the Iran-focused naval blockade on July 13 after Tehran said it had suspended passage through the strait. He argued that the United States should be compensated for providing security in the waterway and described Washington as potentially becoming the “guardian angel of the strait.”

Iran’s Revolutionary Guard said regular shipping could only resume if US military intervention in the area ended. It also warned that continued interference could cause further incidents affecting the global oil and gas industry.

The escalation followed heavy exchanges of missiles and drones between US and Iranian forces, which cast doubt on an interim agreement intended to reopen the strait and suspend hostilities during further negotiations.

Initial Proposal Lifted Oil and Logistics Risks

Trump’s initial fee announcement previously contributed to a sharp increase in oil prices and broader concern over transportation costs. West Texas Intermediate crude rose by US$2.39, or 3.14%, to US$78.40 per barrel as markets reacted to renewed fighting, Iran’s efforts to restrict passage, and the possibility of additional costs for cargo moving through Hormuz.

Oil prices remained elevated on July 14 as continued attacks on vessels and US military operations sustained concerns about energy supplies. Brent crude climbed above US$86 per barrel during trading, while shipping traffic through the strait fell to a two-month low.

The Strait of Hormuz is a critical route for international oil and liquefied natural gas shipments. Extended disruption could increase fuel, maritime insurance, and freight costs, with knock-on effects for manufacturing, agriculture and consumer prices. Trump’s reversal may remove one direct cost risk for shipowners, but it does not resolve the security conditions that initially drove oil prices higher.

Continued attacks, military warnings and uncertainty surrounding the blockade could still discourage carriers from entering the area. Companies may also maintain route diversions, risk premiums, and higher insurance coverage even without the proposed fee.

Shipping Sector Challenged Fee’s Legality

The 20% proposal also faced opposition from shipping organizations and maritime-law experts. The International Maritime Organization said it opposes fees imposed on vessels passing through international maritime waterways, although it was waiting for additional details from the United States before Trump withdrew the proposal.

Hapag-Lloyd described the proposed fee as “fundamentally wrong,” arguing that international straits should remain open without transit charges. The German Shipowners’ Association similarly warned that such a measure could be legally impermissible and establish a precedent for fees in other strategic waterways.

Industry representatives distinguished the Strait of Hormuz from artificial waterways such as the Panama and Suez canals, where tolls finance infrastructure construction, operations, and maintenance.

Investment Details Remain Unclear

Trump’s decision shifts the proposed compensation model from cargo charges to broader economic agreements with Gulf governments. However, the administration has not disclosed whether the discussions involve new commitments or investments that had already been announced. It also remains unclear whether the potential agreements would be directly tied to US naval operations in the Strait of Hormuz.

The policy reversal could provide short-term relief to shipping companies concerned about an immediate 20% charge. The continuing blockade on Iranian trade and the risk of additional military escalation mean the strait remains a major source of volatility for logistics and energy markets.

Oil prices trimmed some gains after Trump withdrew the proposal, but remained supported by uncertainty surrounding tanker safety, regional attacks and the future of US-Iran negotiations.