Trump announced the proposal on Monday in a post on Truth Social, declaring the United States would be known as “THE GUARDIAN OF THE HORMUZ STRAIT” and would charge a 20% toll on all cargo shipped through the strategic waterway.

According to CNN, the decision surprised Gulf allies and many senior administration officials, despite months of warnings from Trump’s advisers that such a move could undermine US war objectives and align with Iran’s longstanding argument that ships transiting the strait should pay fees.

The report said White House officials spent Monday attempting to determine how the unprecedented tolling system would operate, including who would pay and how fees would be collected.

Confusion deepened after Trump later suggested Gulf allies, rather than shipping companies, would bear the cost.

Leaders from Saudi Arabia, the United Arab Emirates, Bahrain and Qatar then sought to persuade Trump to reverse course, CNN reported.

By Tuesday, Trump said those countries had instead agreed to increase investments in the United States, prompting him to drop the toll proposal.

“I put it out yesterday, I thought it was good,” Trump said on Tuesday, according to CNN.

“I was called by different people, different countries, kings and emirs … and they said we’d love to do it a different way.”

A White House official told CNN the president had considered tolls as a way to reimburse the United States for securing shipping through the waterway but ultimately preferred the investment commitments offered by Gulf partners.

CNN reported that Trump’s proposal came amid renewed conflict with Iran and continued disruptions to shipping through the Strait of Hormuz, which have contributed to higher oil prices.

The report said advisers had argued the toll plan could increase energy costs, create political risks ahead of November’s midterm elections and contradict the administration’s stated opposition to fees on international waterways.

Secretary of State Marco Rubio had said in late June that international law does not permit countries to impose tolls on international waterways and signed a joint statement opposing “any tolls, fees or attempts to assert control” over the Strait of Hormuz, CNN reported.

Following Trump’s announcement, Iranian Foreign Minister Abbas Araghchi welcomed the proposal, saying, according to CNN, “Whoever provides secure and safe passage of commercial vessels through the Strait of Hormuz should be compensated for this service.”