Trump Takes Aim at China by Questioning International Postal Rates
(Bloomberg) -- Donald Trump has found another tool to step up the pressure against China over its exports to the U.S.: the international mail system.
In a memo issued Thursday, the U.S. president directed the U.S. Postal Service to eliminate international postal discounts that let Chinese merchants inexpensively ship goods directly to U.S. consumers’ homes. Such a move could potentially raise costs for Alibaba Group Holding Ltd., while helping e-commerce platforms such as Amazon.com Inc., as well as FedEx Corp. and other international shipping companies.
Trump is taking aim at international postal rates negotiated through the Universal Postal Union, a United Nations agency that coordinates postal policies among nations. The president wants the deals re-examined to ensure that “rates charged for delivery of foreign-origin mail containing goods do not favor foreign mailers over domestic mailers,” according to the memo. The directive also cited national-security concerns, saying that international mail can also be used to ship “high-risk” packages, including opioids.
Representatives for Alibaba didn’t immediately respond to requests for comment. Amazon and EBay Inc. , through spokespeople, said they were reviewing Trump’s memo and declined to immediately comment. Shopify Inc., which provides websites and other online selling tools for more than 600,000 merchants, said in a text message that any changes could help level the playing field for merchants shipping from U.S. addresses.
Any changes to international postal rates could potentially disrupt cross-border e-commerce, the sale of goods from a retailer in one country directly to consumers in another. That business, enabled by platforms such as Amazon, EBay and Alibaba, is expected to reach $1 trillion by 2020.
Higher international postal rates could be good news for shippers such as FedEx and DHL Worldwide Express if their services become more cost competitive. Amazon, which offers international shipping services, could benefit.
In his order, Trump asked for his concerns to be addressed at a meeting of the Universal Postal Union scheduled for September in Ethiopia. It’s his latest attempt to eliminate policies that he feels put U.S. businesses at a disadvantage in global trade. Broader efforts have included tariffs on imports from China, the European Union and Canada.
Currently, Chinese merchants can ship directly to U.S. shoppers through the ePacket program, an agreement between the U.S. Postal Service and China Post that gives Chinese merchants the ability to send small packages to U.S. consumers at favorable rates. U.S. based online merchants often complain that its cheaper to ship something to a U.S. customer from China than it is through domestic mail, putting them at an unfair disadvantage. It’s unclear whether Trump’s directive would affect the ePacket agreement.
©2018 Bloomberg L.P.