3 Ways President Trump Could Actually Hurt Amazon (and Jeff Bezos)
President Trump on Thursday once again stated his intent to scrutinize Amazon’s business dealings, continuing his barrage against the $700 billion company that he claims is taking advantage of American taxpayers and the United States Postal Service, as well as harming main street retailers.
“I’m going to study it and take a look,” Trump told reporters aboard Air Force One, according to Bloomberg. “We’re going to take a very serious look at that.” On Tuesday, he wrote on Twitter: “I am right about Amazon costing the United States Post Office massive amounts of money for being their Delivery Boy .Amazon should pay these costs (plus) and not have them bourne [sic] by the American Taxpayer. Many billions of dollars. P.O. leaders don’t have a clue (or do they?)!”
The source of Trump’s ire may be that Amazon is owned by Jeff Bezos, the technology billionaire who in 2013 purchased The Washington Post for $250 million. Trump has repeatedly slammed the Post, which has aggressively covered the Trump administration, as “fake news.” Trump also recently claimed the paper acts as a “lobbyist” for Amazon. The newspaper’s executive editor, Marty Baron, rebuffed those claims, saying Bezos has no influence on its editorial operations.
Trump has not mentioned Bezos directly in any of his recent tweets or statements attacking Amazon; Bezos has not responded to the President’s comments.
Whether Trump takes any action against Amazon remains to be seen. At least some of his assertions about the company, meanwhile, are dubious at best — the USPS is not directly taxpayer funded, for instance. But the President’s attacks have harmed the company nonetheless, causing the company’s stock (and Bezos’ personal net worth) to drop with each tweet as investors fear for the worst.
But what could Trump actually do to hurt Amazon? Here are three potential courses of action he might pursue.
Get USPS to charge Amazon more for package delivery
Amazon is reliant on the United States Postal Service, or USPS, for a great deal of its package deliveries. The company benefits from an arrangement that lets it drop customers’ packages off at USPS depots in bulk. Trump said on Saturday that the USPS should charge Amazon more for the service.
“If the [Post Office] ‘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!,” Trump tweeted. Later that day, he added: “U.S. Post Office will lose $1.50 on average for each package it delivers for Amazon.” (Trump’s tweets appear to be referencing a 2017 Journal op-ed on the topic that in turn cited a Citibank analysis from the same year.)
Trump has doubled down on the idea of getting USPS to charge Amazon more for package delivery since the departure of onetime economic advisor Gary Cohn, per a report in Vanity Fair. According to the magazine, Cohn tried to convince Trump that Amazon is in fact an economic lifeline for the USPS, as fewer people rely on snail mail other than package delivery in the digital age.
“Trump doesn’t have Gary Cohn breathing down his neck saying you can’t do the Post Office s–t,” a Republican with ties to the White House told Vanity Fair. “He really wants the Post Office deal renegotiated. He thinks Amazon’s getting a huge f–king deal on shipping.”
Prevent Amazon from landing a multi-billion contract with the Pentagon
Trump could also work to prevent Amazon, the top player in the cloud computing market, from getting a coveted multi-billion dollar deal with the Pentagon, which is moving its data to the cloud.
Even before Trump’s most recent spat with Amazon, lawmakers were concerned with the prospect of awarding such a major contract to a single company, Bloomberg reported earlier this month. Rival corporations like Microsoft and IBM, as well as some industry groups, have also criticized the deal.
The Defense Department has yet to award Amazon the contract; a victor is expected to be announced by the end of September. But many believe Amazon is positioned as the frontrunner due to its dominance in cloud computing. If Trump wants to strike a blow to the company, he could try to persuade the Pentagon not to give the contract to Amazon, costing the company a hugely lucrative deal.
Threaten Amazon on Twitter
Perhaps the most effective — and certainly the easiest — way for Trump to damage Amazon is to continue tweeting about it.
Trump’s onslaught against Amazon has damaged the company’s stock price, and, by extension, Bezos’ net worth. On Monday morning, after Trump once again tweeted about Amazon’s relationship with the Post Office, Amazon shares dropped 3.9 percent on the New York Stock Exchange. The President’s tweets also catch the attention of the media; Amazon lost $53 billion in market value after Axios reported that Trump is “obsessed” with the company.
By merely tweeting threats directed at Amazon, Trump can spook investors and drive down prices even if he doesn’t actually intend to take action. Still, stockholders may eventually consider Trump’s tweets an empty threat, reducing their tactical value. Trump has targeted other companies on Twitter before, like Lockheed Martin and Toyota, and both saw their stock price recover after a temporary dip.