President Donald Trump announced he is replacing the proposed 20 percent reimbursement fee on cargo transiting the Strait of Hormuz with trade and investment deals from Gulf states, following what he described as "highly productive conversations with Middle East leadership" [1][5][18]. Trump stated on Truth Social that the investments would be "ENORMOUS" and declared the strait open to all shipping traffic except vessels tied to Iran, while maintaining a full naval blockade on ships coming to and from Iranian ports [5][8][12][19]. The reversal came less than 24 hours after Trump declared the United States the "guardian" of the strait and announced the fee as reimbursement for providing security [7][22][24]. Trump told reporters that Gulf officials proposed investing in the US rather than paying a fee, and that he now believes "nobody should be able to charge a fee for the strait or for any other strait" [18].
Critical outlets framed the reversal as a retreat under pressure. BBC reported that the 24-hour policy flip suggests Trump is struggling to find an exit from the Iran war, with oil prices jumping nearly 10 percent on Monday — the biggest one-day increase in six years [21]. Foreign Policy described the shift as a "dizzying approach" and a cave-in to foreign pressure [29]. Brazil's Agencia Brasil framed the decision as a retreat, reporting Trump's argument that the US should be reimbursed because "other nations are very rich" [2]. Gulf News reported the reversal through the lens of a market phenomenon dubbed "TACO" — Trump Always Chickens Out [28].
The fee proposal had drawn objections from legal and industry authorities. The International Maritime Organization stated it "firmly opposes the charging of fees for transit through straits used for international navigation" and that there is no legal basis for mandatory tolls [23]. Germany's Hapag-Lloyd called imposing fees on strait transits "fundamentally wrong" [8], and the German Shipowners' Association echoed the criticism [16]. The contradiction extended to Trump's own administration: Secretary of State Marco Rubio had previously stated that "no country is allowed to charge tolls or fees on an international waterway" under existing international law [20][21][22].
Shipping industry executives and financial analysts warned that the policy shifts destabilize trade. Lasse Kristoffersen, CEO of Wallenius Wilhelmsen, stated that constant changes make it difficult to normalize trade and that his company will not send vessels into the Gulf until there is no risk of attack [23]. Jakob Larsen of BIMCO warned that Trump's approach raises the risk of other countries monetizing international waterways, increasing global transport costs and creating inflationary pressure [23]. German financial experts described the situation as displaying "helplessness" rather than strategy [25], and White House economic adviser Kevin Hassett stated he does not know how the fee would be imposed [19]. Andy Lipow of Lipow Oil Associates estimated the proposed fee would add $16 per barrel to the cost of oil [17].
US-based analysts questioned the substance of the announced Gulf investment deals. Karen Young of Columbia University's Center on Global Energy Policy said the investment expectations "are not financial investment decisions by firms or funds" and that the announcement "seems like a way to save face" [27]. Rachel Ziemba said Trump's details on Gulf investments were "vague" [27]. Ryan Bohl of Rane Network said "there is no ceiling as to what he will claim in terms of investments flowing in" [27].
Iranian officials rejected any US claim to control over the strait. Foreign Minister Abbas Araghchi wrote that "Iran has always been the GUARDIAN of the Strait and will remain so FOREVER" [6][7][19] and seized on Trump's fee proposal as confirmation that governments providing security have a right to charge, stating "20% is of course too much. We will be fair" [23]. The Iranian joint military command declared that the US will not be allowed to control or monitor the strait [15], and Iran's parliament began reviewing a plan for the strategic security of the strait [30]. An Iranian army spokesperson stated that any effort to reopen the strait through military action is "doomed to fail" [30].
Iranian officials also stated that the June memorandum of understanding is effectively dead. Deputy Foreign Minister Kazem Gharibabadi said the blockade decision has dismantled the truce deal and warned that tightening measures will not bring Iran back to negotiations [6][31]. Foreign Ministry spokesperson Esmaeil Baghaei stated that Iran will not comply with the MoU if the US fails to meet its obligations [7]. Iran's top negotiator Mohammad Bagher Ghalibaf declared that "the era of one-sided deals is OVER" [22]. Rosemary Kelanid of Defense Priorities said the MoU is "completely dead" and the conflict has become "a war of attrition" [21].
UN officials warned of humanitarian and legal consequences. UN High Commissioner for Human Rights Volker Turk stated that "deliberately attacking civilians and civilian infrastructure is a war crime" under international law [6] and warned that disruptions to the flow of essential goods through the strait have "serious socioeconomic and humanitarian consequences" [10]. UN Secretary-General Antonio Guterres warned that "a return to full-scale hostilities would have catastrophic consequences" [22].
US military and Gulf officials cited Iranian attacks on commercial shipping as justification for the blockade. US Admiral Brad Cooper stated that Iran has "intentionally targeted civilians" by attacking seven commercial ships [6]. The UAE reported that two national tankers were targeted by Iranian cruise missiles in Omani territorial waters, killing one Indian crew member [11]. The IRGC stated it had carried out missile and drone strikes against the US naval base in Bahrain and an airbase in Jordan [12].
Regional security analysts assessed the renewed hostilities as a contained conflict. Yezid Sayigh of the Carnegie Middle East Center said he doubts the two sides will resume a full war but warned that either side could overplay its hand [8][13][19]. Andreas Krieg of King's College London stated that the conflict has returned to "a low-intensity conflict that will not produce any clear victory for anyone" [19]. Elliot Abrams of the Council on Foreign Relations framed the situation as "a test of patience" between Iran and oil-consuming countries [21].
Gulf states are pursuing long-term diversification away from Hormuz dependency. Saudi Arabia is studying the expansion of its East-West pipeline through the Red Sea as an alternative export route [33]. UAE Minister of State for Foreign Trade Thani bin Ahmed Al Zeyoudi stated that the UAE is moving toward "zero dependency" on the strait [34]. Analysts in India and China reported resilience to the disruption due to diversified supply and strategic reserves [35][36]. China's foreign ministry called for the resumption of safe and normal traffic through the strait as "the common wish of the international community" [30].
Legal scholars argued that the war-powers framework still governs the hostilities. Experts at the Brookings Institution contended that the War Powers Resolution clock had never stopped [37]. UK maritime lawyers concluded that both the Iranian and US blockades are legally problematic under UNCLOS and customary international law [38]. The conflict's human and environmental costs drew attention from labor and scientific voices: seafarers' union leader Manoj Yadav described conditions on trapped ships as "unbearable" [40], and marine scientists warned that armed conflict in the Gulf could trigger one of the most serious marine environmental crises of the modern era [39]. The UN Economic Commission for Latin America and the Caribbean stated that the conflict's impact on the region depends on each economy's trade and energy profile [41].
The blockade on Iran-linked shipping remains in effect, with over 20 warships and hundreds of military aircraft deployed [26]. Citi bank warned that the risk of large-scale military confrontation has increased and that oil prices could remain high for longer if the memorandum of understanding collapses [17].