Trumps hints about taxes, Amazon stock drops

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President Trump tweeted out at Amazon a day after its stock tanked following an Axios report saying he wants to “go after” the e-commerce giant for potential antitrust violations. While there is no clear policy coming from the White House just yet, according to the Washington Post market watchers are jittery as highflying tech giants across the board may be coming in for new regulatory scrutiny.

Before the Amazon sell-off, the Facebook user-data controversy, and the fallout from a self-driving Uber car involved in a pedestrian fatality, stocks sagged over the past several days. Major tech stocks Amazon, Tesla, Netflix, Facebook, Google, and Twitter have all taken dives for a wide variety of reasons.

The Axios report Wednesday said Trump wants to “go after” the e-commerce giant, citing five sources who have talked about Amazon with the president.

In 2013, the Postal Service added Sunday deliveries as demand for packages continued to grow. The USPS teamed up with Amazon to roll out the service to New York, Los Angeles, Dallas, Houston, New Orleans and Phoenix, making it possible for the retailer’s customers to receive packages seven days a week.

The Postal Service’s financial crisis has persisted over the past 11 years. Since 2007, the USPS accrued more than $63 billion in cumulative net losses. Package deliver is one of the bright spots for the service, however. In fiscal year 2017, revenue from package deliveries increased $2.1 billion, up nearly 12 percent from the previous year.

First class mail, the Postal Service’s top revenue stream, is flagging, in spite of the change. It continues to decline each year, while high labor costs and pensions continue to cost billions. Congress mandates that the USPS pre-fund pensions.

Some observers argue that Amazon’s business is one of the things actually keeping the USPS afloat. By contrast, others argue that the USPS could have negotiated a better deal. Meanwhile, analysts have said that Amazon’s own delivery service poses more of a threat to the USPS than it does to private delivery companies FedEx and UPS.

Amazon shares fell as much as 7.4 percent before recovering somewhat to close down 4 percent. Today, they’re at about 5 percent down.

The Supreme Court will hear arguments this year over whether all states can require Amazon to collect sales tax from consumers. Several states say online retailers should have to collect sales tax, even in states where the companies don’t have a physical presence.

The Supreme Court ruled in 1992 that states couldn’t collect sales taxes gathered by mail-order catalog companies unless the firms had a physical presence in a state. South Dakota and several other states argue that things have changed in the era of Amazon.

Trump has blasted Amazon on social media in the past, saying the e-commerce company is hurting the retail industry and causing U.S. job losses. While it’s not clear exactly what the impact would be on supply chains related to e-commerce and last-mile delivery, it’s not hard to speculate that such a leavening influence would inhibit online sales. The question of the impact on manufacturing and the broader economy is another reference point to keep an eye on.

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Chad Prevost

Chad is radio host and broadcast media specialist for FreightWaves.