As the U.S. prepares to continue closing Iranian ports, Trump withdraws a threat of 20 percent tariffs on Hormuz cargo.

President Donald Trump has reversed his threat to impose a 20% tariff on all Hormuz cargo as the United States struggles to break the Iranian waterway.

A few hours before the United States continued to block Iranian ports, he said the damage would be offset by trade and investment agreements with the Gulf countries.

This follows a renewed spat between the US and Iran, which has almost halted oil tankers passing through the Gulf, leading to a sharp rise in oil prices.

The U.S. earlier said it would launch a third overnight strike to degrade Iran’s ability to strike shipping in the region, and on Tuesday Iranian state media reported explosions in several cities, including Bushehr – a nuclear power plant.

Tehran said it had targeted US military facilities in Bahrain and Jordan after earlier shooting down two United Arab Emirates tankers.

The ongoing strikes have highlighted the strategic importance of the sea. Iran accuses the US of meddling in the administration of Hormuz – but control means Tehran could also put the global economy at risk.

As the war escalates, Trump on Monday declared the US the “guardian” of the Strait of Hormuz and vowed to impose a 20% tariff on all cargo transported through the waterway.

Taking matters further, Trump said the United States would impose a maritime embargo on Iran in an attempt to further depress the country’s struggling economy.

US Central Command (CENTCOM) announced on Monday that the US Navy’s embargo on Iranian ports will take effect from 16:00 Eastern Time (20:00 GMT/21:00 BST) on Tuesday.

But in his recent post on Truth Social, Trump said: “I have decided to replace the 20 percent US retaliatory payment with trade and investment agreements with the various Gulf countries to the United States.”

“Those investments will be huge but at the same time very good for them and their future.” The US president did not provide any further details.

In addition, the coast is “open to all shipping traffic except Iran” and “oil is flowing like never before, thanks to the incredible power of the United States.”

“I don’t like the concept of payment, but at the same time, it’s not fair that we’re protecting this coast for the whole world,” Mr. Trump said later after talks in Washington with the new Iraqi prime minister, Ali al-Zadi.

He said he changed his initial payment plan after receiving several calls from Gulf leaders.

Meanwhile, shipping data showed that traffic along the river had dropped to a two-month low. Benchmark Brent crude oil prices also rose sharply.

In the year

Separately on Tuesday, Israeli Prime Minister Benjamin Netanyahu warned that his country’s retaliation against Iran would be more forceful than if it had been attacked first.

“I say to the leaders of Iran: If they attack us, don’t count on silence,” he said in a video posted on social media.