US President Donald Trump has withdrawn his proposal to impose a 20 per cent toll on cargo passing through the Strait of Hormuz, just a day after announcing the measure. The plan reportedly triggered concerns within the White House and prompted Gulf nations to intervene, warning that it could disrupt regional stability and global energy markets.
The announcement surprised key US allies in the Gulf as well as senior officials in Trump’s administration, who had reportedly advised against the move for months.
Trump announces toll on key shipping route
On Monday, Trump declared on Truth Social, ‘The U.S.A. will be, from this point forward, known as “THE GUARDIAN OF THE HORMUZ STRAIT.”‘
He also announced a 20 per cent toll on all cargo passing through the strategically important waterway.
The Strait of Hormuz is one of the world’s busiest shipping routes, carrying a significant share of global oil and gas supplies.
White House and Gulf leaders react
According to CNN, officials inside the White House immediately began assessing how the proposed toll would work, including who would pay it, how the money would be collected and whether shipping companies or America’s Gulf allies would bear the cost.
Meanwhile, leaders from Saudi Arabia, the United Arab Emirates, Bahrain and Qatar reportedly contacted Trump, urging him to reconsider the proposal before it came into effect.
Trump reverses decision
By Tuesday, Trump had dropped the plan. Instead of imposing the toll, he announced that Gulf countries had agreed to increase investments in the United States.
Explaining the decision, Trump said, ‘I put it out yesterday, I thought it was good.’
He further added, ‘I was called by different people, different countries, kings and emirs, and all of the people that we all know and we all love. And they’ve been, frankly, they’ve been very strong partners. And they said we’d love to do it a different way.’
A White House official later said the administration had considered the toll because of the US role in protecting shipping in the region, but accepted the investment proposal instead.
Why the proposal faced opposition
According to the report, advisers believed the toll could push up global oil and gas prices, create political challenges ahead of the US midterm elections and contradict America’s position that international waterways should remain free of such charges.
Only weeks earlier, Secretary of State Marco Rubio had said, ‘No country is allowed to charge tolls or fees on an international waterway. That’s existing international law.’
He also stated, ‘That’s the way it is in international waterways all over the world, and that’s the way we expect it’ll be here.’
Iran responds
Following Trump’s announcement, Iran used the proposal to reinforce its long-standing position that countries responsible for securing the Strait of Hormuz should be compensated.
Iranian Foreign Minister Abbas Araghchi wrote, ‘POTUS is absolutely right. Whoever provides secure and safe passage of commercial vessels through the Strait of Hormuz should be compensated for this service.’
He added, ‘20% is of course too much. We will be fair.’
First published on: Jul 16, 2026 07:20 AM IST
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