According to the news report by Bloomberg, President Donald Trump has ordered a review of the US Postal Service pricing after his campaign manager, Brad Parscale complained that Amazon’s packages were being subsidized at the cost of small businesses.
It is, however, unclear whether the executive order passed by Trump was because of what Pascale said. Either way, Trump was predisposed towards creating more trouble for the online retail giant. Trump has been tweeting about his bugbear with Amazon and how the company is allegedly taking advantage of the US Postal Service.
According to the order by Trump, a commission is to be established, which will be headed by Steven Mnuchin, the Treasury Secretary. This commission will examine the US Postal Service’s finances, and especially examine its relationship with various corporates such as Amazon.com Inc. and how much they are charged.
While the order did not specifically mention Amazon, it was interpreted as the first step to be taken for President Trump’s words to be turned into a policy. Amazon’s stocks fell another 1.2% by the end of trading on Friday.
According to the Brookings Institute’s director of the Center for Effective Public Management Elaine Karmarck, a price increase in the US Postal Service’s rates would definitely harm Amazon. But it would also have a huge impact on the rural areas of America, which is where a large majority of Trump’s voter base is. Karmarck stated that if rural Americans had to pay the full cost of packages being delivered to them, it would become extremely expensive.
According to President Trump, Amazon has been sucking away money from the US Postal Service that it just can’t afford to lose. The executive order stated that as most messages are now transmitted online, the US Postal Service has lost more than $65 billion in the last ten years or so.
According to a source, Parscale informed Trump as well as his aides and policy teams about the alleged benefits that companies like Amazon and eBay were reaping thanks to rates being subsidized for packages from China and other parts of the globe.
Parscale said that these shipping rates were put in place by the 144 year old, 192-member nation Universal Postal Union. This organization is now a part of the United Nations, and it sets the prices for international shipping which includes the discounts given to developing nations.
Parscale, in fact, took to Twitter with his complaints, stating that Amazon and eBay were getting nearly free shipping from China and other countries which was destroying small businesses in the US.
While Trump did not comment about the international shipping prices or the fact that the United Nations was the organization that put them in place. Instead, he focused on Amazon’s ability to pay normal rates. He said that Amazon could afford to pay fair rates to the US Postal Service.
Unfortunately, despite all his rhetoric, Trump does not have much power in doing something about the US Postal Service, or, in fact, increasing the price Amazon has to pay for its shipping. Not unless he manages to get an act of Congress and that is one of his biggest obstacles at the moment.
The most Trump can currently do is appoint another 2 members to the Postal Regulatory Commission later in the year. However, the 5-member body already has reached the maximum number of people from one political party – the Commission already has 3 Republicans in the panel.
The US Postal Service itself has stated time and again that it benefits from its relationship with Amazon, which is one of its largest customers.