US President Donald Trump has backed away from a proposal to impose a 20 percent tariff to protect the Strait of Hormuz as part of a standoff with Iran, saying he would instead seek investment deals with Gulf states.
US forces launched a wave of attacks for a third night in a row after Tehran said it had closed the strait, prompting Trump to reinstate the embargo on Iranian ships and propose tariffs.
But less than five hours before the tariffs were to take effect, Trump said the route was open to all shipping traffic except that of Iran.
“Based on the productive negotiations with the leadership of the Middle East, I have decided to change the 20% Repatriation Fee of the United States and the Trade and Investment Agreements that the various Gulf States will be making in the United States,” He said in a post on Social Reality Tuesday, US time (1am Wednesday AEST).
Trump later told reporters: “I don’t think anybody should charge fees. I don’t like the concept of fees, but at the same time, it’s not fair that we’re protecting this state of the ocean for the rest of the world.”
Oil futures pared their gains after the post rose early on Tuesday. The escalating attacks have raised doubts that an accord signed last month would lead to an end to the war, which has disrupted global energy supplies and raised fears of rising global inflation.
Iran responded by attacking a US military base in Jordan with ballistic missiles while Bahrain, which hosts a US naval base, said it had defended itself against Iranian airstrikes. Jordan said it fired four ballistic missiles and explosions were heard in Manama, the capital of Bahrain.
Before the war, about a third of the world’s oil and gas traffic passed through Hormuz every day. If the United States were to levy a 20 percent tariff, it could generate nearly US$240 million ($344 million) a day.
The United Nations Shipping Agency said it opposes any levies used in international shipping and that there is no legal basis for introducing a mandatory tariff for maritime transport.
Reuters
Get direct mail from our visitors journalists on what is making headlines around the world. Sign up for our weekly What in the World newsletter.
