Trump again chastises Amazon
Firm ‘must pay’ more in taxes, for postal delivery, president says
President Donald Trump lit into Amazon.com for the second time in three days with a pair of Twitter messages that said the online retailer “must pay real costs (and taxes) now!”
On Saturday, the president claimed — citing reports he didn’t specify — that the U.S. Postal Service “will lose $1.50 on average for each package it delivers for Amazon. That amounts to Billions of Dollars,” and added that the “Post Office scam must stop.” Amazon has said the Postal Service, which has financial problems stretching back for years, makes money on Amazon deliveries.
Amazon shed $53 billion in market value Wednesday after Axios reported that the president is “obsessed” with regulating the e-commerce giant, whose founder and chief executive officer, Jeff Bezos, also owns The Washington Post. Those losses were pared Thursday, the final day of a shortened trading week, even as Trump tweeted that Amazon was using the Postal Service as its “Delivery Boy.”
Trump made the link himself in Saturday’s tweets, accusing Amazon of using the “Fake Washington Post” as a lobbyist. The Post and Bezos have responded to Trump’s lobbyist claims in the past by declaring that Bezos is not involved in any journalistic decisions at the newspaper. Amazon.com Inc. and The Washington Post declined to comment Saturday.
White House spokesman Lindsay Walters said Thursday that while the president was displeased with the e-commerce giant, and particularly instances where third-party sellers on the site didn’t collect sales tax, there were no administrative actions planned against Amazon “at this time.”
Still, Brad Parscale, who is managing Trump’s 2020 presidential campaign, hinted in a tweet late Thursday that the administration may act to raise Amazon’s postal costs. “Once the market figures out that a single usps rule change will crush amazon’s bottom line we will see,” Parscale wrote.
Trump is spending Easter weekend at his resort in Palm Beach, Fla., and arrived at the nearby Trump International Golf Club early Saturday, just after the tweets were published. He also criticized Amazon over Twitter during his winter vacation at Mar-a-Lago, Fla., saying in December that the Postal Service “should be charging MUCH MORE for package delivery.”
Amazon regularly uses the USPS to complete what’s called the “last mile” of delivery, with letter carriers dropping off packages at some 150 million residences and businesses daily. It has a network of more than 20 “sort centers” where customer packages are sorted by ZIP code, stacked on pallets and delivered to post offices for the final leg of delivery.
While full details of the agreement between Amazon and the U.S. Postal Service are unknown — the mail carrier is independently operated and strikes confidential deals with retailers — David Vernon, an analyst at Bernstein Research who tracks the shipping industry, estimated in 2015 that the USPS handled 40 percent of Amazon’s volume the previous year. He estimated at the time that Amazon pays the Postal Service $2 per package, which is about half what it would pay UPS or FedEx.
In arguing that the Postal Service is losing money on delivering packages for Amazon, Trump appears to be citing some Wall Street analyses that argue that the Postal Service’s formula for calculating its costs is outdated. A 2017 analysis by Citigroup did conclude that the Postal Service was charging below market rates as a whole on parcels.
A sudden increase in postal rates would cost Amazon about $2.6 billion a year, according to Citigroup. That report predicted that UPS and FedEx would also raise rates in response to a Postal Service rate increase.
Citigroup also said the “true” cost of shipping packages for the USPS is about 50 percent higher than its current rates, leading some editorial writers to conclude that Amazon was receiving the type of subsidy cited in Trump’s Thursday tweet.
But while the Postal Service has lost money for 11 years, package delivery — which has been a bright spot for the service — is not the reason.
Boosted by e-commerce, the Postal Service has seen double-digit increases in revenue from delivering packages, but that hasn’t been enough to offset pension and health care costs as well as declines in first-class letters and marketing mail. Together, letters and marketing mail make up more than two-thirds of postal revenue.
The president’s tweet also assumes that Amazon would be forced to pay if the Postal Service increased its rates for packages. But Amazon has been setting up its own shipping operations in the U.S. and elsewhere in the world to minimize costs.