All Financial Wisdom
Trump vs. Amazon: This is War
Donald Trump does not like Jeff Bezos. The creator of Amazon and owner of The Washington Post has had to endure the latest rant by the President on Twitter (where else?)
In that personal war, there is a visible and a hidden face. The view, as indicated in the tweets, is the accusation that Amazon evades taxes, and takes advantage of its postal service.The hidden one, the real one, is the one that makes Trump think that Bezos uses The Washington Post to attack him. Neither of these two faces seems to have arguments that support the comments and attacks of Donald Trump.
For Trump Amazon is evil
Trump has accused Jeff Bezos that Amazon benefits from billions of dollars in subsidies from the US postal system, but at the same time evades taxes as much as they can. This was made clear in a tweet on March 29:
“I have stated my concerns with Amazon long before the Election. Unlike others, 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 they are putting many thousands of retailers out of business!
(I’m not going embed his tweets)
– Donald J. Trump (@realDonaldTrump)
That message was followed by another one on April 2 in which he again attacked Amazon, highlighting how the owners of stores pay their taxes and Amazon does not, something that is not fair as he sees it:
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. Also, our fully tax paying retailers are closing stores all over the country … not a level playing field!
– Donald J. Trump (@ realDonaldTrump) April 2, 2018
Those messages caused a 5% drop in the value of Amazon shares that day, but Trump does not seem to have any intention of stopping.
“While we are on the subject, it is reported that the U.S. Post Office will lose $1.50 on average for each package it delivers for Amazon. That amounts to Billions of Dollars. The Failing N.Y. Times reports that “the size of the company’s lobbying staff has ballooned,”
– Donald J. Trump (@realDonaldTrump) March 31, 2018
… does not include the Fake Washington Post, which is used as a “lobbyist” and should so REGISTER. If the P.O. “Increased its parcel rates, Amazon’s shipping costs would rise by $ 2.6 Billion.” This Post Office scam must stop. Amazon must pay real costs (and taxes) now!
– Donald J. Trump (@realDonaldTrump) March 31, 2018
One of the objectives of these complaints was to make the US postal service, charge more to Amazon.Trump relied on a now famous report by CitiGroup in which it was stated that the true cost of this operation was 50% more than what it was charging to Amazon, but as analysts have pointed out, they used an adjusted model for that conclusion. Gary Cohn, former COO of Goldman Sachs and adviser to the president, explained that Amazon benefits from lower tariffs because in turn it has managed to increase the volume of shipments after the drop of service in the era of e-mail.
Other analyses came to that same conclusions such as the one published by CBSNews, and according to which, the postal service had reported losses for a decade so was not the fault of Amazon, which in fact had clearly helped because a few business divisions of the postal service that had grown.
In fact, the service “has lost money over the last 11 years, mainly due to health and pension costs.” In 2017, the service lost 800 million dollars with 69,700 million operating income, and according to a 2006 law, it must pre-finance 75 years of health benefits for retirement plans, neither government nor private companies are obligated to do so. “
Amazon certainly takes advantage of the volume discounts of the US mail service, and although it uses FedEx and UPS in this country for its shipments, it usually uses the postal service for that “last mile” of the shipment. The company already commented on the issue in Fortune in 2017, stating that “the Postal Service’s Regulatory Commission has consistently confirmed that Amazon’s contracts with the USPS are profitable.”
Among other objectives, some are advising Trump to cancel potential contracts that would make the Pentagon use the cloud services provided by Amazon, and even investigate the company for anti-competitive practices.
The question is, why has Trump been “Obsessed” Amazon and with Jeff Bezos?
Newspapers and influences
The answer is simple: Bezos is the owner of The Washington Post. He bought it in August 2013, and although those responsible for this medium say that Bezos has no power to decide on the editorial line, Trump does not seem to agree.
Is Fake News Washington Post being used as a lobbyist weapon against Congress to keep Politicians from looking into Amazon no-tax monopoly?
– Donald J. Trump (@realDonaldTrump) July 25, 2017
One of the Republican sources close to the president said that “Trump does not like The New York Times, but he respects it because it is the newspaper of his hometown, in the case of The Washington Post, he has zero respect for it.” Although Bezos claims that he has nothing to do with that editorial tone in The Washington Post, “Trump does not believe him.”
Trump’s animosity with The Washington Post is clear, and in fact he often refers to this newspaper as the “Amazon Washington Post” or “Fake News Washington Post.”The president of the United States has used Twitter to attack Amazon when he has felt attacked by The Washington Post, a newspaper that has been critical of Trump consistently.
Martin Baron, editor-in-chief of The Washington Post, had an interview with The New York Times in which he made clear that his editorial line was completely independent of Trump: “We covered the news about him in the way we think should be covered by any president. Baron also denied that Amazon had influence on the Post plant: “there is no one here who is being paid by Amazon, not a penny.”
In fact, this editor of the newspaper commented how Bezos had never interfered in his editorial line: “I can not say enough emphatically how [Bezos] has never suggested a story to anyone here, has never criticized a story, has never suppressed a story.”
As indicated in The New York Times, Donald Trump’s headers with the media are frequent and changing. Last Monday, the president of the United States had already switched sides in his attack of Sinclair Broadcasting, another news agency.
Maybe not too much. As pointed out in The New Republic, a study by analyst Kat Tretina showed that in nine Trump attacks on private companies on Twitter , his impact on their stock had been practically non-existent: although the prices may decrease significantly after the publication of those tweets, the general trend of such actions is not particularly influenced by such attacks.