Amazon vs. Trump

Donald Trump is known to make personal attacks. Of late, the President of the United States has been making its opinion about Amazon public. This has led to a significant drop in the price of Amazon shares. Investors are wary that the President is obsessed with the success of this company. As a result, it is likely that Trump may bring in anti-Amazon legislation. This fear has led to the collapse of Amazon shares. The stocks crashed 7% in the stock market in one particular day. As much as $31 billion of the market capitalization of Amazon was wiped out in just a few hours. However, the stock later recovered as sanity prevailed over Trump’s vindictive agenda.

In this article, we will have a closer look at the allegations made by Trump. We will also try and understand if these allegations are based on fact or not.

The Allegations Made By Trump

Trump has made three very serious allegations against Amazon. They are as follows:

  • Firstly, Donald Trump claims that Amazon does not pay taxes which are due to local and state governments.

  • Secondly, Trump says that Amazon has forced the United States postal service into a bad deal. According to Trump, the United States post ends up subsidizing Amazon.

  • Thirdly, Trump has alleged that Amazon’s business strategy is predatory. He believes that Amazon’s strategies have ended up single-handedly destroying the small retailers in America.

Trump has also alleged that Jeff Bezos, the owner of Amazon, is using the newspaper Washington Post to scare off politicians. Trump has alleged that Bezos starts publishing negative stories about the politicians who do not act in his interest. This is being seen by many as an extension of the longtime fight between Washington Post and Trump. Trump has been trying to intimidate the reporters at Washington Post for a long time now. Investors are wary that Trump may create new policies which are designed to hurt Amazon’s business. This is the reason why Amazon’s stock price is extremely volatile, and the valuation of the company changes according to the mood of Donald Trump!

The Facts

Amazon has conducted a press release to address the issue. They believe that the allegations being leveled by the President are baseless and not rooted in facts. Here are some of the facts pertaining to the allegations made.

Non Payment of Taxes

Amazon has refuted the allegation that they do not pay local state taxes. Amazon states that it pays taxes in every state that it operates in. Hence, it does pay sales tax in almost all the states. Amazon has released that it has collected and paid over $100 billion in sales tax in the year 2017.

Donald Trump is making his allegations based on old information. As per the earlier laws, companies were not supposed to pay sales taxes in a state if they did not have a distribution center there.

Earlier, Amazon did not have a presence in many of these states and hence was exempt from paying taxes. However, now since Amazon has expanded its distribution center network, it is required to pay taxes.

Amazon has stated that it has complied with all the tax laws in the United States both in letter and in spirit. Amazon has also stated that it pays local property taxes on all the distribution centers that it operates. Hence, the company is paying its fair share of taxes.

However, Donald Trump is not completely wrong. As per many critics, Amazon does not collect sales tax if a third party vendor uses its website to sell goods. In many cases, these vendors are registered outside the United States. Hence, the taxes on these sales are never collected.

The United States Post Deal

Trump has alleged that the United States Postal Service has a cozy relationship with Amazon. They provide extremely low rates to Amazon for shipment of their products. Also, they provide special services including Sunday delivery to Amazon.

Once again, Amazon has refuted this allegation. They have stated that the United States Postal Service has provided them the same rates that they provide to other companies who use bulk shipping. Also, the relationship is mutually beneficial as many analysts have concluded that the USPS is making more money with Amazon as a customer than they would make without it.

Amazon does acknowledge the fact that USPS is in financial jeopardy. The whole world is aware of that fact. Citibank has stated that the USPS will have to raise the price of its services by 50% just to break even! However, this problem is because USPS has massive retirement and pension obligations. Hence, Amazon is not really responsible for the dire situation that USPS finds itself in.

Amazon Has Killed Small Retail

Amazon had stated that the business of small retailers was already in jeopardy even before they came into business. Huge companies like Wal-Mart were already making mom and pop stores redundant. On the other hand, Amazon provides a platform wherein small businesses can sell their products to a larger audience. According to Amazon, several small businesses are prospering with the Amazon model. The company states that its business model is complimentary to the needs of small businesses.

Hence, it can be said that a lot of Trump’s allegations are not based on fact. Instead, these allegations are the part of a smear campaign that President Trump has been running against Amazon.

❮❮   Previous Next   ❯❯

Authorship/Referencing - About the Author(s)

The article is Written By “Prachi Juneja” and Reviewed By Management Study Guide Content Team. MSG Content Team comprises experienced Faculty Member, Professionals and Subject Matter Experts. We are a ISO 2001:2015 Certified Education Provider. To Know more, click on About Us. The use of this material is free for learning and education purpose. Please reference authorship of content used, including link(s) to and the content page url.