Trump drops plan for 20% Hormuz shipping fee

President Trump has abandoned plans to charge a 20% reimbursement fee on cargo shipped through the Strait of Hormuz, saying Gulf states will instead make major trade and investment deals with the United States.

Trump announced the change Tuesday as the U.S. military resumed a naval blockade limited to ships traveling to or from Iranian ports or carrying Iranian cargo. Other vessels are being allowed to pass through the strait.

“The Strait of Hormuz is open to all ship traffic except for Iran,” Trump said. “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.”

Trump said he replaced the proposed fee after “highly productive conversations” with Middle Eastern leaders. He did not identify the Gulf states involved or provide details about the investments, but said they would include factories, plants and equipment in the United States.

The blockade took effect at 4 p.m. ET on Tuesday, according to U.S. Central Command (CENTCOM). It applies to ships traveling to or from Iranian ports and coastal areas, as well as vessels carrying Iranian cargo.

Brent crude oil rose another $2.55, or 3.1%, on Tuesday to $85.85 per barrel. The price had already jumped more than 9% following Trump’s initial announcement of the fees.

The U.S. previously imposed a blockade against Iran from April 13 to June 18. CENTCOM said more than 140 vessels changed course during that period, while nine ships that refused to comply were disabled.

The latest blockade follows renewed fighting between the U.S. and Iran after Tehran attacked commercial vessels in the strait. U.S. forces began striking targets inside Iran on July 7, and Iran responded by launching missiles at what it said were U.S. assets in neighboring countries.