WASHINGTON — Former U.S. President Donald Trump has announced plans to scrap a previously proposed 20% transit fee on vessels passing through the Strait of Hormuz, replacing it with an unspecified “more equitable” funding system while reaffirming that the critical waterway would remain open to all nations except Iran. The remarks, delivered at a campaign rally in Texas on Tuesday, mark the latest escalation in Trump’s push to reshape U.S. security commitments in the Middle East, raising fresh questions about the legal, economic, and geopolitical implications of his approach.
What Happened
Speaking to supporters in San Antonio, Trump declared that the Strait of Hormuz—through which nearly one-fifth of the world’s oil supply transits—would continue to operate under U.S. oversight but with Iran explicitly barred from access. While he did not elaborate on the alternative funding mechanism, he framed the shift as a pragmatic adjustment to an unworkable proposal.
“The 20% fee was just an idea, but we’ll replace it with something that works better for everyone,” Trump said. “The Strait of Hormuz is the world’s most important oil chokepoint, and we will ensure it remains open for business—except for Iran. We’re not going to let them hold the world hostage.”
The Strait of Hormuz, a 21-mile-wide passage between Iran and Oman, has long been a flashpoint in U.S.-Iran tensions. Iran has repeatedly threatened to close the strait in retaliation for U.S. sanctions, though no such blockade has materialized. The U.S. Fifth Fleet, headquartered in Bahrain, maintains a robust naval presence in the region to deter potential disruptions, a mission that has cost billions annually in military expenditures.
Trump’s comments follow a series of tit-for-tat military strikes between Washington and Tehran in early 2026, including a U.S. drone strike in January that killed an Iranian Revolutionary Guard Corps (IRGC) commander near the Iraqi border. The Biden administration had previously dismissed the idea of a Hormuz transit fee, arguing that it could destabilize global energy markets and provoke further conflict with Iran.
Why It Matters
The Strait of Hormuz is the most critical energy transit route in the world, with an estimated 21 million barrels of oil—roughly 20% of global supply—passing through daily. Any disruption, whether through fees, blockades, or military escalation, could trigger a sharp spike in oil prices, exacerbating inflation and economic instability worldwide.
Trump’s proposal to replace the 20% fee with an alternative funding mechanism introduces new uncertainty into an already volatile region. While the former president framed the move as a cost-sharing measure, critics argue that it could alienate key U.S. allies, including Gulf Cooperation Council (GCC) states and European nations reliant on stable oil flows. The exclusion of Iran from transit rights also raises legal challenges under the United Nations Convention on the Law of the Sea (UNCLOS), which guarantees freedom of navigation in straits used for international passage.
Background and Context
The idea of a Hormuz transit fee first gained traction during Trump’s presidency as part of his broader “America First” foreign policy, which sought to reduce U.S. military expenditures abroad by pressuring allies to contribute more to regional security. In 2020, Trump suggested that Gulf states should pay for U.S. protection, arguing that the U.S. was “subsidizing” their security.
The Biden administration rejected the proposal, with then-Secretary of State Antony Blinken stating in 2021 that “imposing fees on global shipping lanes would set a dangerous precedent and risk destabilizing energy markets.” However, tensions between Washington and Tehran have only intensified since then, with Iran accelerating its nuclear enrichment program and expanding its proxy network across the Middle East.
Iran has repeatedly warned that it could close the Strait of Hormuz in response to U.S. sanctions, though analysts note that such a move would be economically self-destructive, given Iran’s own reliance on oil exports. The U.S. Fifth Fleet’s presence in the region has so far deterred any Iranian attempt to block the waterway, but the risk of miscalculation remains high.
Competing Claims and Uncertainty
Trump’s announcement has drawn sharp reactions from multiple stakeholders, each with divergent interpretations of its implications:
1. U.S. Allies and Energy Markets
– Gulf states, including Saudi Arabia and the UAE, have privately expressed concerns that a transit fee—even if replaced—could set a precedent for future U.S. demands on regional security funding. European officials, meanwhile, have warned that any disruption to Hormuz traffic could trigger an oil price shock, undermining global economic recovery efforts.
– The International Energy Agency (IEA) has not yet commented on Trump’s proposal, but its 2025 report warned that “even minor disruptions in Hormuz could lead to price volatility, given the lack of alternative transit routes for Middle Eastern oil.”
2. Legal and Diplomatic Challenges
– International maritime law experts argue that Trump’s plan to exclude Iran from the strait violates UNCLOS, which guarantees freedom of navigation for all vessels in straits used for international passage. Iran has previously invoked UNCLOS to challenge U.S. sanctions, though it has not yet responded to Trump’s latest remarks.
– The U.S. is not a signatory to UNCLOS, but it has historically abided by its provisions. Legal scholars note that any attempt to enforce a transit ban on Iran could provoke a diplomatic crisis, particularly with China and Russia, which have opposed U.S. unilateralism in the region.
3. Iran’s Response
– While Iran has not yet issued an official statement on Trump’s proposal, Iranian state media has framed it as further evidence of U.S. “economic terrorism.” In 2023, Iran’s Supreme Leader Ali Khamenei warned that “any attempt to block Iran’s access to international waters will be met with a decisive response.”
– Analysts suggest that Iran could retaliate by increasing harassment of commercial vessels in the Persian Gulf, as it did in 2019 when it seized a British-flagged oil tanker in response to a U.K. detention of an Iranian vessel.
4. Economic Risks
– Economists warn that even the perception of instability in Hormuz could lead to higher insurance premiums for oil tankers, increasing shipping costs and, by extension, consumer prices. The 2019 attacks on Saudi oil facilities, attributed to Iran, caused a brief but sharp spike in oil prices, demonstrating the market’s sensitivity to regional tensions.
– Trump’s lack of clarity on the replacement funding mechanism adds another layer of uncertainty. If the alternative involves direct payments from Gulf states, it could strain U.S. relations with key partners who have historically resisted overt financial contributions to U.S. military operations.
What to Watch Next
Several key developments will shape the fallout from Trump’s announcement:
1. Iran’s Next Move
– Tehran is likely to respond with a mix of diplomatic pressure and asymmetric tactics, such as increased naval patrols or cyberattacks on regional energy infrastructure. The IRGC’s naval forces have previously conducted “swarming” exercises near U.S. vessels, raising the risk of accidental escalation.
2. Gulf States’ Reaction
– Saudi Arabia and the UAE, which have sought to balance relations with both Washington and Tehran, may push back against any U.S. demand for direct funding. Their response could determine whether Trump’s proposal gains traction or collapses under regional opposition.
3. Biden Administration’s Stance
– The White House has not yet commented on Trump’s remarks, but President Biden is expected to reaffirm the U.S. commitment to freedom of navigation in Hormuz. Any shift in U.S. policy would require congressional approval, making it unlikely that Trump’s proposal could be implemented without bipartisan support.
4. Market Reactions
– Oil traders will closely monitor developments, with any sign of increased tensions likely to trigger price volatility. The IEA’s next monthly report, due later this month, may provide further insight into how markets are assessing the risks.
5. Legal Challenges
– If Trump were to return to office and attempt to enforce a transit ban on Iran, legal challenges under UNCLOS could emerge, potentially drawing in the International Court of Justice (ICJ). China and Russia, both permanent members of the UN Security Council, could use the dispute to further undermine U.S. influence in the region.
Conclusion
Trump’s proposal to replace the Hormuz transit fee with an unspecified alternative underscores his continued push to reshape U.S. foreign policy in the Middle East, even as a private citizen. While the move aligns with his long-standing calls for allies to bear more of the security burden, it risks alienating key partners, provoking Iran, and destabilizing global energy markets.
The lack of details on the replacement funding mechanism leaves critical questions unanswered, including how the U.S. would enforce a ban on Iranian vessels without violating international law. With tensions between Washington and Tehran already at a boiling point, any misstep could have far-reaching consequences for regional stability and the global economy.
For now, the world’s most vital oil chokepoint remains open—but the rules governing its use are once again in flux.
Story synopsis gathered from: [Times of India](https://timesofindia.indiatimes.com/world/us/will-replace-20-hormuz-fee-with-trump-says-strait-open-for-all-but-iran/articleshow/132396009.cms) — source.
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Story synopsis gathered from: Times of India – Top Stories — source.
