Trump reverses course on proposal to impose tolls on vessels passing through the Strait of Hormuz

US President Donald Trump made a surprise decision on Tuesday to abandon a proposed 20 percent levy on ships passing through the Strait of Hormuz, opting instead to pursue trade agreements with Gulf allies to secure compensation.

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This reversal came just a day after Trump announced the planned toll, which was met with resistance from Middle Eastern leaders who persuaded him to reconsider the move.

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Trump took to his Truth Social network to announce the change, stating that he would replace the initially proposed 20 percent United States Reimbursement Fee with trade and investment deals to be made by various Gulf States with the United States.

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The President confirmed that a "FULL Blockade" on ships traveling to and from Iranian ports would still be enforced, set to restart at 2000 GMT on Tuesday, affecting any vessels carrying Iranian cargo.

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The Strait of Hormuz, a critical global waterway for oil and gas, was largely closed by Tehran after the United States and Israel launched an attack on Iran on February 28, but began to reopen following a ceasefire agreement in June.

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However, the truce effectively broke down last week, once again drawing the Strait into the center of military action, prompting Trump to declare that the United States would take on the role of "THE GUARDIAN OF THE HORMUZ STRAIT" and impose fees on shipping to cover protection costs.

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The initial announcement sparked a surge in oil prices and alarm among allies, particularly given the United States' previous criticism of Iran's own plans to charge shipping fees for the Strait.

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Trump revealed that conversations with leaders from Saudi Arabia, the United Arab Emirates, Qatar, Bahrain, and Kuwait had led him to change his mind on the proposed fees, with these nations offering to invest billions of dollars in the United States as an alternative.

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Speaking to reporters in the Oval Office, Trump explained that he had been persuaded by the arguments of "kings, emirs, and all of the people that we all know and we all love," who proposed an alternative approach to securing compensation.

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Iran's military command had previously warned that it would not permit the United States to "interfere" in the Strait, while also cautioning its Gulf neighbors against cooperating with Washington.

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This is not the first instance of Trump, 80, reversing a tough announcement on trade, having eased global tariffs last year after markets were severely impacted, a phenomenon traders have dubbed "TACO," short for "Trump Always Chickens Out."