Trump Attacks Amazon for Hurting U.S. Post Office

his Twitter war this morning. Over the weekend, he tweeted that Amazon must pay real costs and taxes now and that this post office scam must stop. Amazon has said the Postal Service, which has financial problems stretching back for years, makes money on its deliveries, joining me as Robert Hocketed, professor at Cornell Law School, Bob, the full details of the agreement between Amazon and the US Postal Service are not known because the postal service makes confidential deals with retailers.

So what do we know about it? We don't know a great ill, June. I mean, we know a couple of things. Right. Apparently post Office does indeed come out ahead out of the deal with Amazon, which is to say it's in the black, right It the costs that it incurs in shipping Amazon things are less than the revenue that it generates. We also know that the Post Office offers similar deals for all package shipments. It's not Amazon specific, and that, of course leads me to think

that this isn't really about Amazon at all. This is probably more about the Washingtington Post and Jeff Bezos. Let's talk about taxes, which it's apt month to talk about. Jax is Amazon page fifties seven million dollars in taxes last year. It collects them everywhere that has a state sales tax. In most states, it doesn't collect taxes on the products that third party vendors sell through the site. Is it acting completely legally? It is acting quite legally.

There's nothing that's scammy about it unless there's a scam in the tax code, And of course I would be prepared to countenance that um and I wish that the President were prepared to countenance that there's a huge scam in the tax code as well. But he seems to have put or to have acted quite actively to put some of additional scams into the tax code this past December, and there's a Supreme Court case pending a ruling in that case involving online retailers collecting sales taxes. Could that

have an impact on Amazon's collection of taxes? Well, in theory it could. It really just depends on what, you know, what how the court goes about interpreting the tax code itself here, and that's of course a notoriously convoluted code.

It's difficult for people to interpret, and the tax lawyers and judges with expertise and tax law are often thought of as being eccentric precisely because they're able to sort of know the facts of their hands, uh, these very convoluted rules, and then of course the regulations that are promulgated under them. So there might be some effect, but bess far right. As far as we know right now, the dominant understanding of the tax tode and what it requires is such as to show that Amazon is indeed

in compliance with tax law. Hence, if there's a scam going on, that is in the law itself, not an Amazon's use of that law. It's also ironic, I have to say, right, because people have often noted that Trump himself has declared bankruptcy multiple times and taken advantage of that and his retort is always well, the bankruptcy Code allows that. So I have simply taken advantage of the law and what it allows me, and Amazon can rejoin

with the same reply to Trump on this one. Let's let's discuss what Trump could do about Amazon if he decided to take the fight beyond the tweets. Could he push for regulatory investigations of Amazon, either for antitrust, privacy, or other reasons. He could I mean, in theory, he could direct the Justice Department to conduct some sort of

an inquiry or some sort of an inquest. The problem is that if this is simply based on his whim or on his sort of personal animus toward Bazos or the post Um, He's going to get himself in trouble because of course this will look like delicious prosecution on the part of the Justice Department. Uh, and then will of course reinforce growing perceptions that this man is treating the White House and the President see as a kind of personal play thing to sort of carry out his

various personal vendettas and to align his personal offers. Well, we know that there's a case going on right now where the Justice Department is suing and it's an unorthodox kind of suit for an antitrust suit attacking the A. T and T Time Warner deal, and that was after Trump's criticism of the deal and CNN, which is owned by Time Warner. But the judge is not allowing that in. So it's already shown that it can take an orthodox step. So might it do that here? I mean it could happen, right,

it could. But again, what's sort of go on here is you know, I'm down with if I can put it in that kind of skipster way, I'm I'm down with getting serious about anti trust law again. And it would be wonderfully being a good news if it looked like Trump himself. We're interested in this in a kind of an across the board way, in the kind of

a general principled way. But if you're just sort of selectively targeting people who happened to be your personal enemies for antitrust investigations or tax violation investigations and so quick, all while your own companies and multiple other companies are doing exactly what Amazon has been doing, and exactly what Time Warner has been doing, and exactly what all of these other large firms that are currently being investigated are doing.

Then it begins to make it begins to make it look like this is not a case of the rule of law. This is a case of again somebody who's governing by women and on the basis of personal animus. So let's let's turn to what again, what he could do? What the president could do. Brad Parscal, who's managing Trump's presidential campaign, said in a tweet last Thursday, once the market figures out that a single USPS rule change will crush Amazon's bottom line, we will see who raises the

post Office rates. Well, that's determined by the Postal, the Post Office board itself. The president could have some influence on that, right. I mean, it's not an altogether sort

of untethered agency. It is. It's a federal instrumentality. Um. And that's another thing I kind of wanted to point out earlier is I thought, well, if your concern is that the Post Office is in charging Amazon enough, perhaps there should be an inquiry into why the Post Office is charging it so little, and indeed why it's charging

all it's so little for all package deliveries. My understanding is that it charges about half to Amazon and other package delivers what UPS, FedEx and other such shipping agencies do. What if it were to raise the rates up to three quarters of what those other firms do, that it would seem to me would keep the post office in the black and still make it a better value for the shippers uh than fed X or UPS or any other competing private delivery service. Another thing is the stock market.

Amazon is down um more than four today and plunged uh last week, so after an Axios report that the President was quote obsessed with regulating the company. So this is also taking you know, hitting his his stock market bread rights. It is uh, it does do that, But on the other hand, it also of course diminishes the size of Jeff bezos portfolio, right, And my understanding is that Mr Bezos has lost something like four to ten billion dollars in recent days from his portfolio thanks to

his Amazon holding was taking a hit. And my guess was it would be that Trump maybe derives more pleasure from knowing that Mr bezos Is portfolio is dropping, then he takes pain that he finds pain in the suffering that the tex Stalks as a whole are enduring as a result of these uh strange and obsessive tweets. So let's just go bottom line here, Bob, that seconds left. What what in your view will come of this? Will just it just be another round of tweets and that's it.

Will anything really come of this? I think some I think there will be more fall out in the sense that there will be more gickering back and forth between Trump and Bezos or Trump and Amazon um and maybe, you know, Bezos will say something nice about Trump, or will Cow tow in some way and then it'll all go away, or Mr Bezos will sort of stand up for his company and for himself, and this could end up into you know, this could sert culminate in protracted litigation.

He's taking on a pretty powerful enemy this time, so many forty times richer than he is. So I'm quite interested to see how that plays out. Will we will talk more about that as it goes along, if if there's any more to these, any more tweets coming. That's Bob Hocket. He's a professor at Cornell Law School. The Environmental Protection Agency already has concluded that Obama era fuel economy standards aimed at slashing greenhouse gas emissions are too

aggressive and need to be revised. Agency officials brief California regulators on their conclusion last week as they put the final touches on a document justifying the decision to roll back automobile gas mileage and pollution standards. According to people familiar with the discussions, e p A Administrator Scott Prude is expected to formally announce the move tomorrow during an

event at a Virginia car dealership. My guest is Charles Warren, head of the environmental law practice at Kramer levinef Talas and Frankel. Chuck tell us about the changes the Trump administration is going to propose to the Obama rules. Well, the Obama rule June is in effect really requires by that you have fuel economy getting fifty four point five miles per gallon, which is for cars and light trucks, and that's, you know, roughly double what it was at

the beginning of the Obama administration. And there they're supposed to be a mid course correction look at it which was done started to be done in and the Obama administration then basically said we're not going to do anything. Now. The Trump administration for the years twenty they now want to roll those back and not even not even to not not even anywhere near fifty four, and you know, it may be closer to what it is in which

is like thirty eight or even below that. And so they're trying to really turn the clock back quite a bit on this and it's going to have obviously many repercussions, particularly with the California waiver in place. Right. Let's talk about the California waiver because that allows California to set its own pollution and gas mileage standards and other states follow that, and the state a G has already said that the state is going to resist any changes. So

can we expect a long legal battle here? Yes? Here, here's the problem for the automakers actually, and that's why they're getting a little more than they bargained for with this aggressive attempt to roll back the Obama fuel economy standards. California has a waiver that's been in the Clean Air X since seventy two, and the waivers have been granted and they're allowed to set their own standards, as you indicated, and other states can follow the California standards if they

follow them exactly. And they're about twelve states that follow that, and those states if you look at them, you know, they're like New York, Pennsylvania, bunch of other pretty big states. Uh. They account for about thirty five cent of the cars made in the United States. So if nothing else happens and they roll back the federal standards and the California standards stay in place, then the auto industry is going to be faced with making two different kinds of cars,

which they hate. They're not gonna want to do that, and so what it means they're gonna have to follow the California standards as as a practical matter, They're not gonna want to have a car marketed below the California standards.

So the what what will happen if it plays out, is that the administration might try and challenge the California waiver which is in place until and there will be a titanic battle on that and Chuck, how long would it take for the e p A to propose new rules, have hearings, and do all the different things that need

that are needed for a change. Yeah, they have you know, they they're going to say that the standards to twenty five are not appropriate, but then they do have to go through a whole rulemaking process and have a common period, and that will be challenged and this could be any a number of months, quite a few months before that

would happen. And meanwhile, you know, you you have lead times for the auto industry and uh, they'll they'll be faced at some point with a deadline where they have to then say, Okay, we have to start manufacturing cars and we're gonna have to contin in you, you know, with the California standards. That's and that's my sim So it's gonna be it's gonna be messy, very messy, exactly. And I think the the industry asked for some relief, but I don't think they wanted to go as far

as the Trump administration is taking it. They just wanted the way you calculate the standards to be a little more leeway so that when they had some of these SUVs and other things, they would be easier to meet

those standards. But they really didn't want a wholesale roll back to the kind of levels that the administration is talking about because I think it makes them look bad because a lot of these companies have said, we're on board on fuel economy, we want to know, push electric cars, etcetera. And so I think it puts them in a difficult positions. It's speaking about difficult positions the e p A chief,

Scott Prue, it has come under more criticism. There were disclosures about his use of first class flights to travel around the world, trips to Italy, and now there are disclosures about this lee sing of a Washington apartment in a very unusual terms from a lobbyist. Do you think

he can survive this latest disclosure? Well, these are the kinds of disclosures that usually have resulted in people losing their jobs because the public takes a dim view of people in high office sort of abusing their position to make these kinds of special deals and that other people can't get um. But Scott Pruett has been someone who's been very in sync with THEE what the Trump administration

wants to happen. And it's possible that he could survive because he's doing everything that the Trump administration wants him to do and is pushing very aggressively to do that. So I think it's a question of maybe if enough stuff keeps piling up that hill have gone too far. But so far he seems to be surviving. I've heard something incredible. I mean that he traveled with third the thirty in his protection detail, thirty people, and um, there's there's been a lot coming out, so but we will

keep apprized of what's going on. And thank you so much Chuck for being on the show. That's Chuck Kramer. He's the head of the environmental law practice at Kramer eleven. Thanks for listening to the Bloomberg Law Podcast. You can subscribe and listen to the show on Apple podcast, SoundCloud, and on Bloomberg dot com slash podcast. I'm June Brosso. This is Bloomberg