What a postal service price hike could mean for Amazon

News or Noise Is Amazon jeopardizing the U.S. Postal Service

President Trump Is Convening a Task Force to Study the US Postal System

President Donald Trump is taking his ongoing battle with Amazon up a notch by ordering a review of the United States Postal Service's finances.

In a series of Twitter messages, Trump has accused Amazon of draining the Postal Service of money it can not afford to lose.

Trump, who has called the Post Amazon's "chief lobbyist", has several ways he could hurt Bezos, if he decides to push his tin-pot-dictator instincts to their limit: nine seats on the Postal Service's governing board have been vacant since 2016.

In fact, the Postal Service has lost money for years, but it actually makes money on package deliveries, with Amazon accounting for a large chunk of that. Speaking on the condition of anonymity, one White House source confirmed to Bloomberg that any recommendations the task force puts forward could affect Amazon. On Thursday night while you were laughing about the pee-pee tape, Trump quietly ordered a review through an executive order that claims that the U.S.P.S.is operating unsustainably, from a financial standpoint, so it "must be restructured to prevent a taxpayer-funded bailout".

It's a decision that came after the president's renewed attack on Amazon on March 31 when he tweeted: "It is reported that the U.S. Post Office will lose $1.50 on average for each package it delivers for Amazon".

"Then we could tell if the postal service is losing money", delivering packages for Amazon, he told NBC News, noting that any profits on parcel delivery may not take into account all the institutional costs the postal service incurs.

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Fox News politics editor Chris Stirewalt on President Trump's attacks against Amazon and what the president's motives for attacking the e-commerce giant may be. Revenue from packages grew by more than $2 billion from the prior year, by far the most of any service category.

Amazon relies on USPS for many of its last-mile deliveries and in 2013, the two struck a landmark deal to deliver packages on Sundays.

The firm estimates that 40%-50% of Amazon's shipping costs in the US are associated with the USPS and, assuming a 15%-20% increase in shipping costs, there are $1-$1.8 billion in potential shipping costs Amazon may have to absorb in 2018.

The task force will be chaired by Treasury Secretary Steven Mnuchin, with help from the directors of the Office of Management and Budget and Office of Personnel Management.

At the same time, the Postal Service's package delivery business is growing: The post office's fiscal report for 2017 shows that packages and shipping brought in $19.5 billion in revenue, or 28 percent of the total for the year.

The main drag on USPS finances, in reality, has been the mandate that it pre-fund its retiree health care obligations to the tune of more than $38 billion.

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