US President Donald Trump walked back his announcement of a 20% levy on all commercial shipping through the Strait of Hormuz on July 14, less than 24 hours after declaring the fee on Truth Social. Trump said he had 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,” citing “highly productive conversations with Middle East leadership” (Axios; Foreign Policy; Al Jazeera).
The original proposal, which Trump framed as reimbursement for the cost of US military operations protecting the strait, immediately drew opposition from maritime law experts who said unilateral tolls on international shipping lanes violated the UN Convention on the Law of the Sea. Gulf state governments — which depend on unfettered strait access for their own oil exports and re-export trade — pushed back against the idea privately and through diplomatic channels. Energy markets had also reacted with concern, given that a 20% levy on all vessels transiting one of the world’s most critical shipping chokepoints would have passed through directly to global oil prices.
Trump’s replacement proposal — Gulf investment deals — aligns with a pattern from his first and second terms of converting security commitments into investment flows. No specific deal amounts or structures were announced on July 14.
Significance for Pakistan
The strait toll reversal removes one layer of acute concern for Pakistan. As a significant importer of LNG and petroleum products, Pakistan’s energy costs are directly exposed to Hormuz passage conditions. The record petrol price of Rs310.71/litre effective July 11 is already partly attributable to elevated global oil prices driven by US-Iran hostilities; an additional 20% transit levy would have compounded those costs further at the consumer level.
The US naval blockade of Iranian ports — a separate measure from the toll proposal — went into effect as scheduled at 4pm ET on July 14, meaning the Hormuz passage remains subject to military enforcement against vessels heading to or from Iranian shores, even as Trump’s toll demand was withdrawn. Pakistan’s government has not publicly commented on the toll reversal.
