Trump Reverses 20% Strait of Hormuz Transit Fee After Backlash, Replaces It with Gulf Trade Deals — Then What?

By Tuesday morning, July 14, Trump wrote on Truth Social: "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" . CBS News confirmed the reversal . The immediate cause appears to be the fierce international backlash that erupted within hours of the original announcement.

The Speed and Scope of Backlash

The fee proposal met opposition from multiple fronts almost immediately:

• IMO rejection: The International Maritime Organization (IMO), the UN maritime agency, formally opposed the imposition of any charges on vessels passing through a strait used for international navigation, citing international law that guarantees the right of transit passage. The IMO demanded details on Trump's proposal on Monday, July 13 .
• Legal questions: Analysts questioned whether the U.S. could unilaterally impose a 20% transit fee under the UN Convention on the Law of the Sea (UNCLOS), which guarantees "transit passage" through straits used for international navigation and prohibits suspension or burdensome levies .
• Industry criticism: Major shipping and oil trading firms flagged the fee as effectively "protection money," warning it would raise insurance premiums, reroute vessels, and spike consumer costs . Oil prices surged on the announcement — posting their biggest single-day gain since April — as markets priced in renewed supply disruption .
• European rejection: The European Commission had already rejected an earlier version of this idea in April, stating that both US and Iranian proposals breached UNCLOS and that "International law provides for the freedom of navigation… no payment or toll whatsoever" .

Broader U.S.-Iran Conflict Context

Collapse of the June ceasefire

A 60-day interim agreement was signed on June 17, 2026, lifting the U.S. blockade of Iranian ports in exchange for Iran guaranteeing safe passage through the strait . The ceasefire never fully held. Both sides accused each other of violations — Iran struck U.S. sites in Kuwait and Bahrain on June 28, and the U.S. retaliated . On July 8, Trump declared the ceasefire "over" after U.S. strikes on Iranian positions near the strait . By July 12, Trump said the memorandum of understanding was finished , and on July 13 he ordered new strikes and the 20% transit fee .

Resumed strikes and shipping disruption

From late June through mid-July, the U.S. and Iran traded dozens of strikes — with U.S. forces bombing Iranian military and naval facilities, and Iran attacking U.S. bases and striking commercial vessels in the strait . The cycle of retaliation escalated sharply after an Iranian attack on a Cyprus-flagged container ship . Shipping activity in the strait declined dramatically. By early July, vessel volume was "considerably lower" than pre-conflict levels . In Q1–Q2 2026, oil flows through Hormuz fell nearly 30% in the last quarter alone, per the U.S. Energy Information Administration . The broader disruption was described by Bloomberg as "the biggest oil supply shock in history" .

Oil price volatility

Oil prices spiked dramatically during the conflict. By late June, WTI had dropped below $70/barrel during a brief truce , but prices surged again after the ceasefire collapsed and the 20% fee was announced on July 13 — the biggest single-day gain since April . Analysts warned that prices reflected an overly optimistic view and that renewed supply risks could drive them much higher .

A Pattern of Policy Shifts

Trump's position on Hormuz tolls shifted four times in just three months: starting with the idea in April that "the U.S. should collect it," shifting to "we do not want a toll," then "the U.S. could be an exception," and finally the 20% levy — followed by its reversal . The rapid reversal underlines how quickly the combination of legal opposition, industry pressure, and market reaction can force even a high-stakes policy to be walked back.

As of July 14, 2026, the 20% fee is no longer policy — replaced by a pledge to pursue Gulf trade and investment deals instead. Whether those deals materialize, and whether they can stabilize a waterway that saw a nearly 30% drop in oil flows in a single quarter, remains an open question.