White House hold its wrath as Trump pulls the knives out against Amazon

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

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 U.S. 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 organization 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 Market Inc. merger, but never seriously considered any action because the Federal Trade Commission and Justice Department handle those matters independently.

Biggest Gain

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 including the Postal Service, taxes and retailing -- weighed on the company’s shares, sinking its market value by as much as $55 billion over the past six days.

“I am right about Amazon costing the United States Post Office massive amounts of money for being their Delivery Boy,” Trump said on Twitter. “Amazon should pay these costs (plus) and not have them bourne by the American Taxpayer. Many billions of dollars. P.O. leaders don’t have a clue (or do they?)!”
 

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 organization and its mail customers. It is legally prohibited from charging shippers less than its delivery costs. Further, taxpayers don’t directly support the Postal Service’s operations.

Washington Governor Jay Inslee, a Democrat, defended the company in his own tweet.

“The president’s attacks on @Amazon are unfounded and misguided,” he said. “A big part of Washington’s economic success is due to Amazon’s 40,000+ employees in our state and the small businesses they empower to sell to the world.”
 

Last Mile
 

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

“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 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.

David Vernon, an analyst at Bernstein Research who tracks the shipping industry, estimated in 2015 that the Postal Service handled 40 percent 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 Inc. and FedEx Corp.

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

The Justice Department or FTC could open antitrust or consumer protection investigations. State attorneys general could open investigations, or states could seek to collect more sales taxes from third-party vendors who use Amazon.

The company is also competing for a multibillion-dollar contract to provide cloud computing services to the Pentagon. On Tuesday night, the president was to dine with Safra Catz, the co-chief executive of Oracle Corp., one of Amazon’s rivals for the Defense Department contract, people familiar with the plans said.

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.