Trump drops plan for 20% fee on cargo transiting the Strait of Hormuz

U.S. President Donald Trump has abandoned plans to impose a 20% fee on cargo transported through the Strait of Hormuz. He announced the decision just one day after unveiling the proposal, saying the United States would instead pursue trade and investment agreements with Gulf countries.

According to Trump, following talks with representatives of Saudi Arabia, Qatar, Bahrain, Kuwait, and the United Arab Emirates, the parties agreed that financial commitments and investments would be more effective than introducing a new transit fee. He said he preferred attracting major investments into the U.S. economy over imposing additional charges.

However, there has been no confirmation that Gulf states have agreed to make new investment commitments. According to Bloomberg sources, at least one government in the region said it had not agreed to increase previously planned investments in exchange for canceling the proposed Strait of Hormuz transit fee.

Following Trump’s announcement, crude oil prices initially declined before moving higher again. Brent crude oil traded about 2% above the previous day’s level at around $85 per barrel, reflecting continued market concerns over security risks in the region.

Tensions around the Strait of Hormuz remain elevated. Despite ongoing technical talks between the United States and Iran over Tehran’s nuclear program, the two sides have exchanged strikes several times in recent weeks, while Iran has claimed to have closed the Strait following U.S. attacks. Concerns over shipping through this strategic waterway were the main reason behind the proposed transit fee.

Tags: USA, Hormuz