Could Trump Make Amazon Prime More Expensive? His Tweets Probably Won't Amount To Much
Last week, President Donald Trump tweeted his concerns about the retail company, Amazon, claiming that the online retailer does not pay enough taxes and that it pays too little to the U.S. Postal Service to deliver its packages. Amazon has not responded directly to Trump's comments, though various media outlets have reported that his claims are not accurate. In fact, the Postal Service told CNN that its deal with Amazon benefits both companies equally. Nonetheless, the president's attacks on Amazon probably have you wondering whether Trump could make Amazon Prime more expensive. For those who are concerned, it looks as though Trump's words will likely have little effect on the company.
The Trump-Amazon saga began on March 28, when Jonathan Swan of Axios published an article suggesting that Trump "hates" Amazon. The article also reported that a source claimed Trump has "... wondered aloud if there may be any way to go after Amazon with antitrust or competition law." It further noted that he believes that Amazon gets preferential treatment from the U.S. Postal Service (USPS). However, as an unnamed source told Axios, "It's been explained to him in multiple meetings that his perception [about the post office and Amazon's relationship] is inaccurate and that the post office actually makes a ton of money from Amazon."
Seemingly in response to Axios' article, Trump tweeted about Amazon on March 29, the day after the article's publication. The president expressed concerns similar to those reflected in the Axios piece, saying:
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 are putting many thousands of retailers out of business!
The president also published follow-up tweets on the issue on March 31, which suggested that Amazon is running a "post office scam." Notably, according to CNN, Amazon does not receive preferential treatment from the Post Office — it receives the same rate as all companies that ship large quantities of goods. The company also has what the postal service called (via CNN) a "mutually beneficial" agreement to have the USPS deliver packages on Sunday.
While Trump's critical words were not ideal for Amazon — the company's stock temporarily fell about 4 percent after the president published his tweet — USA Today reported that there is likely little Trump can do to truly impact the company. This also means that Trump's harsh words for Amazon will probably do little to affect consumer prices, including the price of Amazon Prime.
USA Today reported that Michael Pachter, the managing director of equity research for Wedbush Securities in Los Angeles, reflected on the president's limited scope in the matter, saying, “The President can hate Amazon all he wants, but he has limited power to do much about it."
As the outlet noted, the federal government could — and may — force online retailers to collect state sales taxes, but Amazon already does this, contrary to what Trump's tweet suggested. USA Today also suggested that it is highly unlikely that the federal government would pursue Amazon for anti-trust issues, as modern U.S. anti-trust law focuses on consumer welfare, not breaking apart large companies.
Moreover, MarketWatch suggested that Amazon's investors should ignore Trump's concerns about the company. This means that it predicts the president's tweets will ultimately have little impact on Amazon's share prices and likely minimal effect on the cost of the company's goods and services. As Charlie Smith, the chief investment officer at Fort Pitt Capital Group, told the outlet, “Trump is way more bark than bite. Eighty percent of what he says never happens, and the other 20% is usually an opening gambit that’s way out of left field ..."
Recode also noted that, while Trump's comments initially caused Amazon's share prices to fall on March 29, the stock rebounded merely a few hours later and its value actually then went up about one percent.
Indeed, the White House itself says that it currently has no planned action in regard to Amazon. On Wednesday, Press Secretary Sarah Huckabee Sanders stated, "We have no announcements and no specific policies or actions that we are currently pushing forward or considering taking."
Overall, while Trump's criticism of Amazon is certainly not an asset for the company, it seems that, at least right now, it is unlikely that the president can or will do anything that impacts the retailer in a significant way.