President Donald Trump has declared the U.S. will act as the “guardian” of the Strait of Hormuz, imposing a 20% toll on all cargo transiting the vital waterway and restarting a blockade on Iranian ports. This move, amidst escalating U.S.-Iran conflict, has sent oil prices soaring and stock markets tumbling.
International bodies and legal experts question the legality of such tolls, but Trump insists on reimbursement for U.S. security services in the region. The situation remains volatile, with significant geopolitical and economic implications.
READ MORE FROM CNBC
In a dramatic escalation of U.S.-Iran tensions, President Donald Trump announced Monday that the United States will impose a 20% toll on all cargo transiting the Strait of Hormuz, positioning the U.S. as the "guardian" of the vital oil shipping route. Alongside this move, Trump declared the U.S. will reinstate a blockade on Iranian ports near the strategic waterway, effective Tuesday at 4 p.m. ET, according to U.S. Central Command.
The announcement, made via a Truth Social post, comes as the U.S. and Iran have engaged in renewed strikes, further complicating prospects for a peace deal. Trump's declaration challenges international norms, as maritime experts and regulators, including the UN's International Maritime Organization, assert that no country has the legal basis to charge tolls for passage through such international straits. The IMO stated it "stands firmly against charging fees for passage through straits used for international navigation." This stance aligns with previous declarations by U.S. Secretary of State Marco Rubio, who noted that charging tolls on international waterways is against existing international law.
Oil prices reacted swiftly to the news, jumping significantly, while stock indexes experienced a decline. The Strait of Hormuz, which previously handled 20% of the world's oil trade before the conflict, has seen tanker traffic dwindle. Trump asserted that the strait "is OPEN, and will remain OPEN, with or without Iran," promising "fair and open use" for all countries except Iran. He justified the toll as a reimbursement for the U.S. costs in providing safety and security to the volatile region, declaring the U.S.A. will be known as "THE GUARDIAN OF THE HORMUZ STRAIT."
The U.S. had previously rejected Iran's own proposals to charge tolls. The recent developments follow a letter from Trump to the Senate indicating new military actions against Iran commenced on July 7, as required under the War Powers Resolution. This comes despite a congressional measure last month directing an end to U.S. hostilities, which proved largely symbolic.
Iranian Foreign Minister Abbas Araghchi responded via X, asserting Iran's control over the strait and its right to compensation, though deeming Trump's 20% figure excessive. "20% is of course too much. We will be fair," Araghchi posted.
Experts like David Goldwyn, president of Goldwyn Global Strategies, expressed skepticism, calling the 20% charge "quite an extortionate level" and questioning the U.S.'s ability to guarantee safe passage, suggesting Trump's pronouncements are primarily "bluster." This policy echoes Trump's earlier suggestions, including a Truth Social post after a mid-June ceasefire deal, where he alluded to potential U.S. tolls as reimbursement for acting as the "Guardian Angel to the countries of the Middle East." The erosion of that ceasefire has seemingly prompted Trump to double down on this stance.
Video Embed:
Key Points:
- President Donald Trump announced the U.S. will impose a 20% fee on all cargo shipped through the Strait of Hormuz.
- The U.S. will also reimpose a blockade on Iranian ports near the strait, starting Tuesday.
- Markets reacted negatively, with oil prices rising and stocks falling following the announcement.
- Trump has previously expressed a desire for the strait to be toll-free but has also floated the idea of U.S.-imposed tolls.
