The US President says he's standing up for the postal service and brick-and-mortar retailers, others believe Amazon shareholders are paying the price for his long-standing grudge with CEO Jeff Bezos.

By Joe McDonough


Posted on April 3, 2018

Amazon has been taking advantage of the US Postal Service and not paying enough tax, according to Donald Trump.

The President has tweeted as much on several occasions in the past week, including a Monday post which hinted at further regulation for the Seattle-based e-commerce giant.

“Only fools, or worse, are saying that our money losing Post Office makes money with Amazon. THEY LOSE A FORTUNE, and this will be changed,” he wrote.

“Also, our fully tax paying retailers are closing stores all over the country… not a level playing field!”

The direct attack on Amazon resulted in a sell-off on Monday, with shares of Jeff Bezos’ company plummeting 5.9% to $1,362.48, wiping out nearly $45 billion from its market value.

Since Axios reported on March 28 that the President is “obsessed” with cutting down Amazon, it has lost more than $60 billion in total.

Speculation is rife that Trump’s crackdown on Amazon has more to do with a grudge against Bezos.

Bezos also owns the Washington Post, which the President refers to as “the fake Washington Post” because he deems it to be prejudiced against his administration.

The Washington Post is operated independently from Amazon, however Trump has called the news agency a “lobbyist” for the retailer.

What does Amazon pay for its shipping

It is understood that Amazon pays the postal service roughly half what it would to United Parcel Service Inc or FedEx Corp to deliver a package but it is the same lower rate that it charges other bulk shippers.

And while the post service has been running at a loss for more than a decade, Variety says that is more to do with federal orders to cover billions in pension and health-care costs.

As far as its tax-paying is concerned, Amazon collects sales tax in the 45 states that charge it, and remits it to the states. It also reportedly pays local property taxes on its distribution centres, as well as on the Whole Foods stores it purchased last year.

It does not collect sales tax on purchases made from third-party vendors.

Regardless of the motivation for Trump’s singling out of Amazon, it has understandably spooked investors.

“Calling out Amazon without offering any type of prescription is what’s concerning the market,” said Erin Browne, head of asset allocation at UBS Asset Management.

“Any time Trump, or any president, starts interfering in corporate behaviour, that is concerning for the market.”

It certainly does not help the tech sector, which has already been battered in recent weeks thanks to Facebook.

Facebook has lost more than $50 million in market value since the Cambridge Analytica data-harvesting scandal, and the threat of tighter regulation across the industry has seen shares in Apple and Alphabet (Google’s parent-company) also take a hit.