WASHINGTON — President Trump ditched his proposed 20% Strait of Hormuz toll Tuesday after Gulf allies agreed to replace it with billions in US investments — as Washington and Tehran traded large-scale strikes across the region.

“I put it out yesterday, I thought it was good. [But] I was called by different people, different countries — kings and emirs, and all of the people that we all know and we all love — and they’ve been, frankly, they’ve been very strong partners,” Trump told reporters in the Oval Office. 

“And they said ‘We’d love to do it a different way, we’d love to invest in the United States with billions and billions of dollars,'” he added.

President Trump on Tuesday backed off his proposed 20% toll for ships passing through the Strait of Hormuz. AP Photo/Razieh Poudat President Trump greeting Iraqi Prime Minsiter Ali al-Zaidi at the White House on July 14, 2026. REUTERS

Those nations included Saudi Arabia, the United Arab Emirates, Qatar, Bahrain, Kuwait and “others,” he noted.

What the agreement does, regional officials and sources told The Post, is flip the script on Tehran. 

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Rather than forcing the world to pay the US Navy for protection, Washington will now have billions of dollars in fresh economic incentives to keep the waterway open, while robbing Iran of one of its favorite geopolitical pressure points.

Trump said he has long believed the US has carried too much of the burden securing one of the world’s busiest shipping lanes, but ultimately decided against creating what he viewed as a dangerous international precedent.

“I don’t think anybody should be able to charge for the strait, or for any other strait anywhere else in the world,” he said.

“But we were doing it as a reimbursement,” Trump continued. “The Gulf states are going to invest a tremendous amount of money into the United States, and that was very satisfactory to me. I think it’s actually much better.”

Two cargo ships seen in the Strait of Hormuz on July 12, 2026. AFPTV/AFP via Getty Images

The Trump reversal came after several hours of US strikes on Iran were reported. 

Tehran fired drones and missiles at American allies Kuwait and Bahrain. Tanker ships in the Strait of Hormuz were also hit — further limiting outbound traffic through the shipping lane.

Also on Tuesday, the US reinstated the blockade on the Strait of Hormuz, in which Navy ships in the Arabian Sea will intercept Iranian vessels trying to leave or enter the vital waterway. 

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Follow The Post’s latest coverage on the blocked Strait of Hormuz and its lasting effects

• Strait of Hormuz oil flowing back to pre-Iran war levels, Vance says
• Iran says it won’t ‘allow’ other countries to de-mine the Strait of Hormuz
• How US turned up the heat on Iran with Hormuz, Lebanon before ship strikes
• Iran doubles down on control of Strait of Hormuz after weekend of violence — as shipping traffic plummets
• Iran launches attacks on US military sites in Kuwait and Bahrain: report

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Trump’s new arrangement for trying to keep the strait open now gives the US buy-in for the region’s security, as Emirati political analyst and author Ahmed Sharif Al Ameri told The Post the new arrangement “runs deeper than simply replacing a toll with investment.”

“The investment commitments lock in long-term alignment by creating American stakeholders who benefit directly from stable flows through the strait,” he said. “… Iran has long treated the strait as its ultimate lever against sanctions, threatening closure during every major confrontation.”

The president said the investments will also benefit Gulf allies, who told him “there’s never been a time like this with the United States, with the factories, with the plants, with everything else, and we would like to invest tremendously in the United States, as opposed to a fee.”

Vessels are anchored in the Strait of Hormuz as seen from Musandam, Oman, June 3, 2026. REUTERS

The announcement came just one day after Trump declared the United States would take a 20% cut of the value of all cargo moving through the Strait of Hormuz as repayment for becoming the waterway’s “guardian.”

“We’ll become the guardian of the strait. Maybe we’ll call it the guardian angel of the strait, and we should be reimbursed for that,” Trump said during an interview on “Fox & Friends.”

Brandon Daniels, CEO of AI supply chain company Exiger, estimated Monday that such a reimbursement system could have generated roughly $200 billion annually.

After Trump reversed course, Daniels said the president hadn’t abandoned the idea but chose the faster, more practical path.

“Creating a mechanism to toll the strait would have been a multinational, complex and heavily negotiated legal framework between countries. This would have required a major trade agreement,” he said. “These types of trade agreements take time, and the viability of security and trade agreement is still being assessed.”

While Trump did not reveal the size of the coming Gulf investments, he described them as “MASSIVE but, at the same time, extraordinarily good for them” in a Truth Social post.

Israeli attorney Nitsana Leitner, who represents victims of Iranian terrorism, called the new move a “masterclass” in geopolitical strategy.

“If the US has every reason now and in the future to keep the strait open for global commerce while denying Iran the ability to weaponize it, Tehran loses its precious leverage without a shot being fired,” she said.

“That’s not transactional diplomacy — it’s strategic statecraft that leaves Iran holding a card no one fears anymore.