President Donald Trump spoke directly to the people through Twitter early this morning to attack Amazon, blaming the popular online retailer for job losses across the nation in regards to a lack of taxation.
“Amazon is doing great damage to tax paying retailers,” Trump tweeted. “Towns, cities and states throughout the U.S. are being hurt — many jobs being lost!”
Amazon is doing great damage to tax paying retailers. Towns, cities and states throughout the U.S. are being hurt – many jobs being lost!
— Donald J. Trump (@realDonaldTrump) August 16, 2017
The tweet appeared to have some impact on Amazon’s market value, with the company’s stock falling as much as 1.2 percent following the tweet, according to CNBC. That amounts to a loss of approximated $5.7 billion in market cap.
Trump has criticized Amazon and its CEO, Jeff Bezos, multiple times before. The president has also carried a long-running feud with The Washington Post, which Bezos owns.
In February 2016, then candidate Trump threatened Amazon at a campaign rally, saying the retailer would “have such problems” if he became president.
President Trump and Treasury Secretary Steve Mnuchin have both expressed issues with Amazon’s tax policies, particularly whether or not Amazon should be required to collect sales taxes on purchases in states where the company has no physical presence.
The National Conference of State Legislatures reported that the tax loophole cost states $17.2 billion in lost sales taxes in 2016. Amazon began collecting sales taxes from all 45 states that have a statewide sales tax on April 1, according to CNN.
The Donald Trump administration is clearly trying to hurt Amazon.com, Inc. (NASDAQ:AMZN). Since the administration has sufficient tools to accomplish this goal, investors should sell AMZN stock.
President Trump’s anger at Amazon stems from the many negative articles about Trump, his campaign and his administration that have been published by The Washington Post, which is owned by Amazon CEO Jeff Bezos.
Upset with a number of the newspaper’s articles during the campaign, Trump called its coverage “inaccurate” and banned it from covering campaign events and personally attacking one of its reporters. He also accused the company of not paying “internet taxes.”
Trump also lashed out at Bezos and Amazon during the campaign, saying that the CEO “bought The Washington Post to have political influence”and ominously warning that “if I become president, oh do they (i.e. Amazon) have problems. They’re going to have such problems.” In the course of the campaign, Trump also warned that Amazon has a “huge antitrust problem.”
In May 2017, Drudge Report founder and editor Matt Drudge suggested that Bezos has been “motivated in bloodsport after Trump threat of Amazon monopoly breakup,” Drudge wrote, according to The Washington Examiner.
Indeed, The Post has published several damaging stories about Trump and his administration, including the revelation about the president sharing intelligence with Russian officials, the news that Trump displayed a fake cover of Time Magazine featuring his likeness at a number of his establishments, a report that Trump’s attorney general, Jeff Sessions, talked about the presidential campaign with the Russian ambassador, and most recently, transcripts of the president’s conversations with two foreign leaders.
Amazon still doesn’t require shoppers to pay sales tax on purchases from third-party vendors that sell products through Amazon.
“I am encouraged that Amazon is now charging tax, I believe, on their own sales but not the marketplace,” Mnuchin said according to CNBC. “I’m not sure I understand the consistency on that, but I respect the states’ ability that there’s an awful lot of money that’s not being collected.”
Amazon’s ability to offer goods at low prices with cheap or free shipping has put pressure on retailers to either give up market share to Amazon, or cut their prices to a lower mark that is potentially unsustainable for most traditional retailers, Steve Dennis wrote in Forbes. As a result, many brick-and-mortar retail establishments around the country have been forced to close locations.
However, from a consumer standpoint, Amazon has been revolutionary. Amazon is unmatched in its sales volume and provides shoppers the ability to purchase clothes, groceries and everything in between with a few clicks (or a few words to an Amazon Alexa device) to be delivered within days or even hours.
Amazon’s advances in warehousing and delivery technology allow customers in increasingly remote locations to have access to products much more easily and in a more timely manner. Future advances include Amazon’s continued efforts to develop its drone delivery system and expand it into cities.