Vessels passing through the Strait of Hormuz following a ceasefire deal reached between the U.S. and Iran. (Shady Alassar/Anadolu via Getty Images)
President Donald Trump abandoned his plan to impose a 20% fee on cargo ships transiting the Strait of Hormuz on Tuesday, less than 24 hours after announcing it, saying Gulf states had offered to make large investments in the U.S. instead. The naval blockade on Iranian ports went into effect as planned at 4 p.m. ET.
"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. Trump offered no details on the total sum involved or which governments had made commitments.
Speaking at the White House during a meeting with the Iraqi prime minister, Trump said he had spoken with leaders from Saudi Arabia, the UAE, Qatar, Bahrain and Kuwait, who urged him to pursue a different arrangement. "They would love to invest more money in the United States at record amounts," he told reporters. "This way, there's no fee."
Bloomberg, citing an unnamed source, reported that at least one Gulf government told the U.S. it had made no new financial pledges as the price of dropping the fee.
After the announcement Monday, officials had no clear answer on which agency would be responsible for collecting the fee, with the Treasury Department and the Energy Department both cited as candidates, according to The Wall Street Journal. Secretary of State Marco Rubio had previously said imposing such a fee would violate international law. "No country is allowed to charge tolls or fees on an international waterway," Rubio told reporters in June.
While Trump dropped the fee, he moved ahead with reinstating the Iran blockade. U.S. Central Command announced that forces would enforce the blockade against vessels transiting to or from Iranian ports and coastal areas beginning Tuesday afternoon. CENTCOM said it would allow commercial vessels supporting humanitarian aid to pass. CENTCOM instructed vessels headed toward the Gulf of Oman and Strait of Hormuz to reach U.S. naval forces via bridge-to-bridge radio channel 16.
The U.S. had lifted an earlier blockade in June after signing a memorandum of understanding with Iran — a deal both sides have since disputed over who controls traffic through the strait. The ceasefire that accompanied that agreement has since collapsed, with the U.S. and Iran exchanging strikes over the weekend and into Tuesday.
Iran's Revolutionary Guard said Tuesday it had struck two supertankers in the Strait of Hormuz, according to NPR. Iran also said it launched missiles and drones against U.S. military infrastructure in Bahrain and military outposts in Jordan. The UAE said two of its tankers were hit by Iranian cruise missiles while transiting the strait, killing one person.
Brent crude traded about 2% above Monday's close near $85 a barrel by midday Tuesday, after initially surging on Trump's fee announcement before paring gains when he reversed course.
