A Blog by Jonathan Low


Apr 1, 2018

Resentment, Revenge and Real Estate: Why Trump Is 'Going Postal' On Amazon

Shipping Amazon's packages has been good for both the Postal Service and for Amazon. But Amazon is an easy target these days - and the US Postal Service has long been a target for anti-government ideologues who want it's vast cash flow to go to their supporters. 

That Amazon founder and CEO is a billionaire considerably wealthier than Trump himself, owns a company that is hurting commercial real estate in many locales - and is owner of the Washington Post, which is frequently critical of his administration - provides all the incentive the president needs to attack both. And, we should add, probably to no avail. JL

Mark Milian reports in Bloomberg and Jordan Weissman reports in Slate:

Since signing a landmark contract in 2013 to expand their business relationship and deliver packages on Sunday, revenue has ticked up; losses are down; and shipping is just about the only growth segment. (But) Trump’s "real estate buddies tell him—and he agrees—that Amazon is killing shopping malls and brick-and-mortar retailers.”
Bloomberg -The Amazon blame game took another turn when President Donald Trump spun the wheel around to the U.S. Postal Service. Amazon.com Inc. is a convenient scapegoat for just about any issue. The mail is no different.
Amazon isn’t killing the post office. Since signing a landmark contract in 2013 to expand their business relationship and deliver packages on Sunday, revenue has ticked up; losses are down; and shipping is just about the only growth segment in the mailbag. The Postal Service is saddled by larger issues. Sure, there’s the internet, and nobody is sending postcards anymore, but the big financial dilemma is the agency’s yearly obligation to set aside cash to cover health care costs for future retirees. This accounts for billions in losses.U.S. mail is also required to cover every American, employing carriers who roam neighborhoods six days a week (or seven, if Amazon has a package ready). The Postal Service has said it actually makes money on the Amazon deal. E-commerce revenue provides “essential support to pay for the network and infrastructure that enables us to fulfill our universal service obligation,” David Partenheimer, a spokesman for the Postal Service, wrote in a January op-ed. “All users of the mail benefit.”

Amazon rebuilt its delivery network around the post several years ago. The company operates “sortation centers” that complement warehouses and organize packages by zip code before sending them to post offices for the final leg of delivery. In Kenosha, Wisconsin, Amazon has a million-square-foot warehouse, connected to a 500,000-square-foot sort center with a covered conveyor belt that resembles an airport skybridge.
Ending the U.S. mail relationship would probably be a bigger setback for Amazon than for the Postal Service. On a dark day in late 2011 when the postmaster general proposed cutting 100,000 staff and shutting thousands of post offices, EBay Inc. shares dropped more than 6 percent. Amazon’s deal came soon after, and radical cuts were avoided—probably not a coincidence.
So the e-commerce giant got the Postal Service off life support, but any benefit beyond that is minimal. Nothing short of a complete overhaul of the mail system, some kind of bankruptcy-style financial restructuring or reneging on those health-care promises would turn the Postal Service into a sustainable business.
Maybe that’s Trump’s goal. Building an antitrust case against Amazon—an idea the President has floated—is a tall order. Amazon’s five-year contract with the Postal Service could be up for renewal this year. Breaking up that relationship would be an easier way for Trump to inflict pain on the #AmazonWashingtonPost, as he calls it.

Slate Donald Trump “wants to go after” the company, possibly by changing its tax treatment.
This is not an especially shocking development if you’ve kept up with Trump’s occasional rants about Amazon CEO and Washington Post owner Jeff Bezos. Trump hates the newspaper’s critical White House coverage and has accused Bezos of using the publication as a political sword to protect Amazon’s business interests. “If I become president, oh do they have problems. They’re going to have such problems,” he said during a campaign rally in 2016. According to Axios, Trump’s rich pals have added fuel to the fire by telling him that Amazon is hurting their businesses. “His real estate buddies tell him—and he agrees—that Amazon is killing shopping malls and brick-and-mortar retailers,” Axios writer Jonathan Swan reports. Trump is also apparently hung up on the mistaken belief that Amazon is somehow fleecing the U.S. Postal Service. (Pretty much the opposite is true; Amazon’s packages are a crucial moneymaker for USPS.)
The president, as usual, does not have a precise game plan. He has supposedly mused about attacking Amazon on antitrust grounds, but nobody really has any idea how that would work. (Slate ran a piece last year about how the Feds could bring a competition case against the everything store; it struck this nonlawyer as interesting, but maybe a little novel for the courts.) He’s also talked about tinkering with its tax treatment.
The latter might actually get him somewhere. While Amazon already collects sales tax everywhere on the goods it sells directly, it does not collect sales tax everywhere for third-party shops that do business on Amazon Marketplace, which gives them a bit of an unfair leg up against brick-and-mortar retailers. The company started tacking state sales tax onto Marketplace orders shipped to Washington this year after the state passed a law, but is fighting a court battle over attempts to collect in South Carolina.
Amazon makes a great deal of money off of Marketplace. It earned more than $10.5 billion in fees from merchants last quarter, up 38 percent year-over-year, compared with $35.3 billion from its own direct sales. That breakneck growth might slow a bit if all Marketplace sales finally had to include sales tax.
That wouldn’t be an entirely bad thing. When it comes to sales taxes, Amazon and its flock of smaller third-party merchants should be forced onto an even playing field with local retailers. States are already pushing things in that direction regardless. But if Trump’s rage at Bezos spurred Congress to move on the issue and more broadly modernize the law governing internet sales taxes, it would present a rare silver lining to the president’s seething resentments. To be sure, the spectacle of a White House using legislation to punish a media owner might be less than great for civil society and would probably send yet another chilling message to would-be corporate critics. But from a tax policy perspective, it would be a fine outcome.


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