On Sunday, President Trump announced the United States would charge a 20% fee on all cargo shipped through the Strait of Hormuz — the narrow waterway that carries 20% of the world's energy supply. By Tuesday afternoon, he'd scrapped the fee entirely and replaced it with something bigger and much better.
"Based on highly productive conversations with Middle East leadership, 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," Trump posted on Truth Social on July 14. He added that the investments would be "MASSIVE but, at the same time, extraordinarily good for them."
The original proposal was straightforward — the U.S. Navy protects the strait, so foreign shippers should pay for the service. Trump framed it as reimbursement for "any and all costs necessary to do the job of providing safety and security to this very volatile section of the World." He even coined a title for the arrangement: the United States would be known as "THE GUARDIAN OF THE HORMUZ STRAIT."
Secretary of State Marco Rubio had articulated a different legal position back in June, stating that "no country is allowed to charge tolls or fees on an international waterway." That tension between the fee concept and international maritime law gave the pivot a convenient off-ramp. Trump himself acknowledged the friction in typically blunt fashion: "I don't like the concept of a fee. But at the same time, it's not fair that we're protecting this strait."
So instead of a toll, Trump negotiated direct investment commitments from Saudi Arabia, the UAE, Qatar, Bahrain, and Kuwait. The details remain forthcoming, but Trump promised the deals would see "Factories, Plants, and Equipment pour into the United States at Historic levels." Rather than skimming 20% off every tanker, Washington gets capital infrastructure on American soil — assets that create jobs and don't require customs enforcement in a war zone.
The backdrop makes the deal-making more remarkable. The U.S. has been exchanging airstrikes with Iran since February 28. A 60-day ceasefire negotiated in June collapsed. By July 9, only 22 ships were crossing the strait daily, down from 147 before the conflict — an 85% drop in commercial traffic through the world's most important energy chokepoint. Iran's Parliament Speaker and U.S. negotiator Mohammad Bagher Ghalibaf posted that "the era of one-sided deals is OVER," which is the kind of statement that tends to age poorly when you're the one whose ports are blockaded.
And blockaded they remain. While the toll disappeared, the Iran squeeze did not. Trump simultaneously declared the strait "open to ALL Ship traffic except for Iran" and reinstated the full Iranian port blockade at 4 p.m. ET Tuesday. "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," he posted.
Michael Singh, managing director of the Washington Institute for Near East Policy, noted that the language of the deal "hews much more to what Iran wanted" — suggesting Tehran's negotiators may have viewed the fee removal as a concession. But the blockade staying in place tells a different story. Iran's ports stay shut. Their cargo stays grounded. The strait is open to the entire world and closed to exactly one country.
The Washington Times reported that a memorandum of understanding from mid-June had failed to reopen the strait or establish a lasting peace framework, making this week's pivot the second attempt at resolving the standoff through negotiation rather than escalation.
What Trump effectively did was convert an unpopular and legally questionable toll into bilateral investment deals that Gulf nations had every incentive to accept — their economies depend on that strait being open and their ships being unblocked. The 20% fee was the opening bid. The factories and plants are the closing price.
