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As Trump attacks Amazon on Twitter, White House holds its fire

Apr 04 2018 05:15
Jennifer Jacobs and Spencer Soper, Bloomberg

Washington - Judging from his tweets, President Donald Trump appears to have the knives out for Amazon.

But inside the White House, there are no active discussions about turning the power of the administration against the company, according to five people familiar with the matter who spoke on condition of anonymity.

None of the five people was aware of any ongoing discussion about turning Trump’s tweets into action against Amazon, not on the legal or regulatory fronts, or even regarding its reliance on the US Postal Service, which has drawn the lion’s share of Trump’s wrath.

Trump expressed a desire to aides last summer to raise the Postal Service’s rates for delivering Amazon packages, one person said. His staff explained to the president that the Postal Service is an independent organisation and its mail rates are set by a commission, the person said.

Aides also discussed antitrust options in light of the Amazon and Whole Foods merger, but never seriously considered any action because the Federal Trade Commission and Justice Department handle those matter independently.

Market value

Amazon posted its biggest intraday gain in a week, reversing an earlier decline, on news of the White House’s inaction. Trump’s attacks - five tweets on subjects from the Postal Service to taxes and retailing - have weighed on the company’s shares, sinking its market value by as much as $55bn over the past six days.

Amazon was down on Tuesday after Trump’s latest tweet, in which he again claimed without evidence that the company costs taxpayers billions of dollars through a delivery deal with the US Postal Service.

The president’s claim is unsubstantiated. While its contract with Seattle-based Amazon is confidential, the Postal Service has argued that its e-commerce services benefit the organisation and its mail customers. It is legally prohibited from charging shippers less than its delivery costs. Further, taxpayers don’t support the Postal Service’s operations.

“Amazon has the money to pay the fair rate at the post office, which would be much more than they’re paying now,” Trump said to reporters on Tuesday at the White House. The president claimed, citing an unidentified report, that the post office loses $1.47 each time it delivers a package for Amazon.

Amazon regularly uses the Postal Service to complete what’s called the “last mile” of delivery, with letter carriers dropping off packages at about 150 million residences and businesses daily. It has a network of 35 “sort centres” where customer packages are sorted by zip code, stacked on pallets and delivered to post offices for the final leg of delivery.

David Vernon, an analyst at Bernstein Research who tracks the shipping industry, estimated in 2015 that the Postal Service handled 40% 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 publicly-traded United Parcel Service and FedEx.

While aides say the White House isn’t currently preparing punitive measures toward Amazon, the company remains exposed to government action on several fronts.

Amazon in Trump’s crosshairs: Here’s what the president could do

The Justice Department or FTC could open antitrust or consumer protection investigations. The company is competing for a multi-billion dollar contract to provide cloud computing services to the Pentagon. State attorneys general could open investigations, or states could seek to collect more sales taxes from third-party vendors who use Amazon.

In a pair of Twitter messages on Saturday, Trump said Amazon “must pay real costs (and taxes) now!”

Amazon collects sales taxes in every state that levies them for its own sales, but not on behalf of third parties that sell through the site.

Any move made by Trump that is perceived as revenge against Amazon founder Jeff Bezos for his ownership of The Washington Post would invite comparisons to President Richard Nixon, who, at the height of the Watergate scandal, threatened the Post’s broadcast licenses.

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