President Trump speaks to the press Friday in the Oval Office of the White House during the signing ceremony of the latest coronavirus relief package. Evan Vucci/Associated Press
WASHINGTON — President Trump said Friday he would not approve an emergency loan for the U.S. Postal Service if it did not immediately raise its prices for package delivery.
“The Postal Service is a joke,” Trump told reporters, responding to a Washington Post report on the Treasury Department’s plans to extract concessions from USPS in exchange for a line of credit Congress approved to aid the agency during the coronavirus pandemic. “The post office should raise the price (of package delivery) four times.”
Trump recently signed a law that allowed the cash-strapped agency to borrow $10 billion from the Treasury Department. The Post has reported that the White House wants to force changes at the Postal Service as part of the terms of the loan.
Trump confirmed Friday that rate increases would be among those conditions, and that he would not allow Treasury Secretary Steven Mnuchin to approve the loan without them.
“If they don’t raise the price, I’m not signing anything,” he said.
Mnuchin added, “We are going to put certain criteria for a postal reform program as part of the loan.”
Trump has railed for years against what he sees as mismanagement at the Postal Service, which has been battered by a decline in first-class mail in the internet age but has found profitability with package delivery. The agency’s revenues have plunged about 30 percent during the coronavirus pandemic, though, as business mail has declined.
Package volume jumped 53 percent last week, compared with the same period in 2019, as a homebound nation dives into e-commerce for groceries, prescriptions and household essentials. Packages ordinarily make up just 5 percent of the Postal Service’s volume but account for 30 percent of its revenue. Each package delivery is required by law to pay for a certain portion of the agency’s overhead. Even so, competitors such as UPS and FedEx still contract with Postal Service as a cheaper option for “last mile” deliveries to rural areas too costly for private-sector service.
Trump and his allies have frequently and falsely claimed that higher package rates on internet shipping companies – Amazon, in particular – could ease the Postal Service’s financial troubles. But the move could hurt the agency by artificially raising its prices above those of UPS and FedEx, analysts say.
“If those (USPS) rates are raised in that manner, competitors can raise their rates, too,” said Art Sackler, manager of the Coalition for a 21st Century Postal Service, an advocacy group for commercial mailers. “And so those companies will gain and the Postal Service will lose. And that, of course, at the end of the day will mean it’ll be much, much harder even than it is right now for the Postal Service to accomplish its mission of universal and affordable service to everyone everywhere every day.”
Former Army Secretary John McHugh, chairman of the Package Coalition advocacy group, said in a statement that Trump’s proposal would raise prices for consumers, small businesses and rural communities.
“Now, when Americans need affordable and reliable package delivery service more than ever, Congress must fight to guarantee emergency relief for the Postal Service and stop this package tax,” he said.
Much of Trump’s ire at the Postal Service has been aimed at Amazon, whose owner, Jeff Bezos, also owns The Washington Post. The president’s proposal would hit Amazon harder than other shipping companies because it contracts more often with USPS for “last-mile” service. It also has less room to pass higher costs off to consumers because it is both a retailer and shipper.
The Postal Service repeatedly has defended its arrangement with the e-commerce giant, saying it gets fair rates for the services it provides in a highly competitive environment.
Analysts say higher prices would likely lead Amazon to deliver more packages on its own, and spurn the Postal Service. Already, Amazon delivers close to half of its own shipments. Before the pandemic, it was on pace to deliver more packages annually than either UPS or FedEx, its two main adversaries, by 2022, according to Morgan Stanley.
“(Trump) is interposing his own flawed judgment for a very complex tactical and a price that serves at least a $2 trillion industry,” said Rep. Gerald Connolly, D-Va., who chairs the House subcommittee on postal oversight. “It’s one of the most important services in America. It services every business and every household and it has a workforce of 630,000 people who put themselves at risk every day on behalf of the American population. And he’s willing to risk it all because he’s got a bugaboo in his mind that Jeff Bezos and Amazon are getting a good deal.”
The Washington Post’s Philip Rucker, Damian Paletta and Erica Werner contributed to this report.
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