Finance

Why does Donald Trump have a problem with Amazon?

Why does Donald Trump have a problem with Amazon?

Trump on Thursday accused Amazon of not paying enough taxes, exploiting the US postal system and putting small retailers out of business, but did not present evidence to back up claims or suggest any specific actions.

The tweets come a day after multiple sources reported that Trump is "obsessed" with Amazon and wants to "go after" the e-commerce giant - a report that caused Amazon's shares to fall nearly 5% and wiped out more than $31B in shareholder value in the process.

Trump tweeted early on Thursday.

In its latest annual report, the U.S. Postal Service credits "e-commerce growth" with its package delivery service bringing in $19.5 billion in revenue past year, far more than expected. "Right now, there is no internet sales tax, and, as a result, companies like Amazon can buy and sell goods without having to pay basic retail taxes". Sellers on the marketplace determine whether they collect taxes on sales or not. "We have no announcements and no specific policies or actions that we're now pushing forward or considering taking", she said. There is an argument that the rise of Amazon has actually benefitted the postal service.

The Postal Service saw a net loss of $2.7 billion in fiscal 2017, driven by factors such as declining flat-mail volume and pension and health benefit liabilities.

Amazon has terminated its relationship with law firm Akin Grump Strauss Hauer & Feld, which gets most of its revenue from lobbying, as well as Squire Patton Boggs.

Amazon, among tech companies, is Trump's favorite target, and not just for package delivery.




Amazon has undoubtedly contributed to the closure of many brick-and-mortar stores and the bankruptcy of some chains as more people shop online instead of in malls.

While the Postal Service has lost money for more than a decade, it swung to a profit this year largely because online shopping has led to growth in its package-delivery business.

Trump's attacks on Amazon reflect a broader debate about its effect on the US economy. "They pay little or no taxes to state & local governments, use our Postal System as their Delivery Boy (causing tremendous loss to the U.S.), and are putting many thousands of retailers out of business!" he tweeted.

Meanwhile, Amazon may not be paying its share of local sales taxes. Third party sellers have been crying foul over these sellers getting preferential treatment from the company but Amazon has always maintained it treats every merchant on its platform under the same policy. In December, the president denounced the agency on Twitter for losing billions of dollars when it could be "charging MUCH MORE" to Amazon and other shippers.

Following the release of the article, the White House was asked if there is a plan to target Amazon but Press Secretary Sarah Sanders said no said specific policies were now being considered.

The reality, however, is that Amazon has little to do with why USPS has been bleeding red ink. In a letter in July to The Wall Street Journal, Corbett wrote that the Postal Service's "competitive package products, including those that we deliver for Amazon" are legally required to cover the costs incurred. Amazon, since forming a JV with the Patni group, has also been working closely with Appario Retail. Or is it something to do with the CEO and founder of Amazon, billionaire Jeff Bezos? He's criticized the company for skirting taxes, slammed its CEO Jeff Bezos for using the newspaper he owns to push Amazon's agenda, and occasionally accused Amazon of taking advantage of the U.S. Postal Service. "It's really about policy".