US President Donald Trump backed away from his plan to impose a 20% charge on cargo shipments through the Strait of Hormuz after the proposal was widely panned as impractical. Trump announced the decision on Tuesday, just one day after rolling out the fee, saying that the expected revenue would be replaced by forthcoming direct investments in the US from Gulf states. He did not specify a dollar amount or which countries would participate.“I have 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,” Trump posted on social media. “Those Investments will be MASSIVE but, at the same time, extraordinarily good for them, and their future.” Speaking to reporters later, Trump said, “I don’t think anybody should be able to charge a fee. I don’t like the concept of a fee, but at the same time, it’s not fair that we’re protecting this Strait for the entire world.”Oil pared gains after Trump’s post and then rebounded. Brent crude traded about 2% above Monday’s close near $85 a barrel by 11. 49am ET. The reversal illustrated the bind Trump is in, as hostilities with Iran resume and Tehran refuses to loosen its grip on the crucial waterway. Oil prices surged on Monday when the president first announced his proposal for a so-called “reimbursement” for facilitating shipping in the strait, threatening a rebound in gasoline costs for Americans ahead of November’s midterm elections.Traders, analysts and industry stakeholders had dismissed the idea as unworkable and unlikely to be fully implemented, since it would be so difficult to administer and poisonous to allies around the globe. “I think it’s patently ridiculous and totally irrelevant. It’s Trump nonsense,” Jay Hatfield, CEO at Infrastructure Capital Management, said before Trump’s retreat.If imposed, the charge may have amounted to a roughly $30 million cost for full supertankers carrying oil — far higher than the tolls Iran has charged, according to people familiar with the matter. “The figure itself seems entirely arbitrary and, if imposed, would amount to an extortionate charge,” John Calabrese, a senior fellow at the Middle East Institute, said before the president changed course. “More fundamentally, the proposal treats freedom of navigation less as an international principle to be upheld than as a service to be sold.”Any fees — whether imposed by Iran or the US — would directly affect American allies worldwide, including crudeproducing Gulf countries as well as Asian nations dependent on those supplies. They could set a precedent for similar levies in other waterways, even though international law prohibits coastal states from assessing tolls on passing ships. New charges also would run counter to Trump’s goal of combating inflation ahead of midterm polls, which are expected to be shaped by voters’ cost-of-living concerns.
‘Iran, Hezb will be added to Russia sanctions bill’
US President Trump on Tuesday told reporters that he thought Iran and Hezbollah will be added to the Russia sanctions bill currently under consideration by Congress. Trump said that adding secondary sanctions to China and India had not been discussed. The Russia sanctions bill, championed by the late Senator Lindsey Graham, was initially proposed in April last year, when he called for “bone-crushing” sanctions on Russia. That version would have authorised Trump to impose so-called secondary tariffs as high as 500% on countries that bought Russian energy. Trump plans to support the bill, according to a White House official.Report by Bloomberg
