Trump drops Hormuz fee plan after legal, policy questions 

President Donald Trump on Tuesday dropped his proposal to charge vessels a 20% fee for protection in the Strait of Hormuz, less than a day after announcing a plan that analysts said would break sharply with longstanding U.S. policy, likely violate international law and prove difficult to enforce. 

Trump said he would replace the proposed fee with trade and investment agreements under which Gulf states would make what he described as “massive” investments in the United States, according to a post on his Truth Social website. 

The reversal came after several days of escalating violence in the region and Iranian attacks on commercial shipping in the Strait of Hormuz, through which about a fifth of the globe’s oil usually passes.

Trump on Monday said that the U.S. would act as the “guardian” of the strait, protecting ships from Iranian fire in return for a 20% fee on their cargo. He did not explain how the fee would be calculated, collected or enforced. 

Analysts questioned whether the U.S. has the legal authority to impose such fees in an international waterway, saying the plan would likely violate international law, undercut U.S. support for freedom of navigation and prove resistant to enforcement.

“It is hard to see how this proposal would work,” said Alisha Chhangani, associate director at the Atlantic Council’s GeoEconomics Center.

“It is unclear whether ships would be required to pay before entering the Strait of Hormuz, whether the fee would be linked to receiving a U.S. naval escort, or what consequences vessels would face if they refused to pay,” Chhangani added.

U.S. Central Command, which oversees U.S. military activity in the Middle East, did not respond to questions about whether it will enforce Trump’s proposed fee as part of its blockade on Iranian ports that comes into force Tuesday.

CENTCOM said it will resume the blockade starting at 4 p.m., after Trump posted that it should be reinstated.

Since the war began over four months ago, Iran has fired on cargo ships and oil tankers and declared that it has the right to charge transit fees in the strait.

The moves appear meant to gain leverage following U.S.-Israeli attacks that severely damaged Iran’s military and killed many of its senior military leaders.

The vast majority of countries have rejected the idea that Iran can unilaterally charge tolls in the international waterway. But Trump’s proposed 20% fee proposal was also significantly higher than the transit charges Iran has sought to impose.

Chhangani estimated that a very large crude tanker carrying about 2 million barrels of oil would be charged roughly $32 million per voyage, far more than the reported Iranian fees, which were once estimated at up to $2 million.

Analysts at Lloyd’s List, a trade publication covering the shipping industry, said Iran’s system eventually devolved into “service fees” that were typically quoted at about $120,000 to $150,000, often paid through government-to-government arrangements.

“At those levels, the Iranian Revolutionary Guard Corps’ own pricing structure begins to look remarkably restrained,” wrote Lloyd’s List editor-in-chief Richard Meade.

But the cost comparison is beside the point, Meade said, noting that there is no legal basis for charging vessels that exercise their right of passage through international waters.

“The danger lies in (normalizing) the idea that access to one of the world’s most important maritime arteries can be subject to politically conditioned payments,” he said.

The proposal also appeared to contradict previous statements made by the Trump administration.

Speaking at a meeting of the Gulf Cooperation Council in Bahrain last month, Secretary of State Marco Rubio said the Strait of Hormuz does not belong to any one nation.

“No country on Earth has a right to charge for the use of international waterways, and that will never be an acceptable condition of any deal,” Rubio said. “The president’s been fundamentally clear about that.”

U.S. officials have for decades championed the idea of freedom of navigation, maintaining that international waterways should remain open and accessible to ships of all nations.

Iran’s foreign minister, however, said Trump “is absolutely right” about the need for a toll.

“Whoever provides secure and safe passage of commercial vessels through the Strait of Hormuz should be compensated,” Abbas Araghchi wrote on X, adding that the proposed U.S. amount “is of course too much.”

“We will be fair,” he said.

Trump’s proposal comes as his administration searches for a way to end the war while preventing further Iranian attacks on commercial shipping.

The U.S. on Tuesday said it struck command centers and air defenses in response to an uptick in Iranian attacks against commercial vessels.

The war started Feb. 28 with joint U.S. and Israeli strikes that killed a number of top members of the Iranian government, including Supreme Leader Ayatollah Ali Khamenei.

An interim peace deal reached last month has repeatedly been tested by renewed fighting, while talks on reopening the waterway, halting Tehran’s nuclear program and ending the war remain on hold.

As U.S. forces work to wrest back control of the strait, Trump has repeatedly floated the idea that the U.S. might somehow collect fees or take a portion of Iran’s oil revenue, as it has done in Venezuela.