For the past week, Donald Trump has taken to his Twitter feed to take on a favorite target: Amazon. He claimed that the company uses the U.S. Postal Service “as their Delivery Boy (causing tremendous loss to the U.S.).”
What Slate’s senior business and economics correspondent Jordan Weissmann points out, though, is that while there are some deep-cut controversies surrounding postal economics, this attack is likely more an example of the president attempting to exact a personal vendetta on Amazon CEO Jeff Bezos, whose Washington Post has published negative pieces on Trump and his administration. Trump’s presidency is revealing what happens when you have a world leader who isn’t shy about picking out his favorite industries or companies.
In this S+ Extra podcast—which is exclusive to Slate Plus members—Chau Tu talks with Weissmann about Trump’s influence on the economy, and whether we should be worried about the recent volatility of the stock market.
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This transcript has been edited and condensed for clarity.
Chau Tu: So Trump has basically spent the last month trying to engage in global trade war. Can you break down what’s going on here?
Jordan Weissmann: It’s gotten a little bit less global since it started. The whole thing began with his sort of impromptu announcement that he was going to slap tariffs on foreign steel and aluminum, and that he wasn’t going to exempt any of our allies. He followed that up with some trade actions against China, or announcements that there would be tariffs against about $60 billion’s worth of Chinese good over intellectual property issues.
At the same time he has also started walking back some of the steel and aluminum duties. He’s started giving exemptions to essentially all of our allies. He said he’s going to temporarily exempt Canada and Mexico while they renegotiate NAFTA. He’s going to give an exemption to Australia ’cause we’ve got an important security relationship there, and South Korea because we’ve got an important security relationship there. But not Japan ’cause he’s hated Japan since the ’80s. Donald Trump’s old grudges die hard.
So, the bottom line is that, yes, Trump is kind of embracing his inner protectionist, but he’s doing it in a slightly halting and scattered way that in my opinion looks like is evolving more into a showdown with China. At the same time, his own administration officials are talking about how they hope they can reach a negotiated settlement with Beijing, which suggests maybe this war is more of a series of warning shots than it is an actual conflagration of any kind.
Trump did tweet that trade wars are good, though.
Yeah, “Easy to win.” No, trade wars are not good. You don’t ever want a trade war, because trade is for the most part good, right? The idea behind it is that each country makes the thing it’s most efficient at, and it brings down prices for everyone, and we can all afford more stuff. That said, there are times where if another country isn’t necessarily playing fairly you want to take specific enforcement actions. You want to make sure there’s a level playing field, and everyone’s abiding by the same rules.
Actually, that’s one reason why I’m a little bit sympathetic to some of Trump or Trump’s administration’s motivations when it comes to China and intellectual property. There’s been this long ongoing issue with the Chinese, essentially forcing American companies that want to do business there to hand over their tech, their closely guarded trade secrets, to local Chinese companies, and all sorts of issues, just hacking and stealing—sort of with the Chinese government’s tacit approval. Those are things that have had to be dealt with for a long time. It’s not clear the tariffs are the best way to do it. A better thing might be to sit down and come up with some sort of trade agreement, but who knows, maybe that sort of seems to be almost like what people like [U.S. Secretary of Commerce] Wilbur Ross are suggesting could eventually happen.
But, yeah, trade wars are not easy. They’re painful. You’re already seeing steel prices, for instance, rise for American companies even though, as far as I know, the tariffs haven’t even officially gone into effect yet really, because domestic producers are realizing, “Oh, we can raise our prices.” That’s the point of it, and so that’s going to mean slightly more expensive cars and aluminum cans and it’s going to make building sky scrapers more expensive, because you have to build them with steel. There are winners and losers from it. The winners are like Nucor and U.S. Steel, but they’re not great.
So Trump’s other target these days is Amazon.
Yeah, that other big thing in the news this week. The other target of his Twitter rants lately.
Right. He’s trying to say that Amazon is destroying the postal service.
Yeah, everyone on my Twitter feed is a fucking expert on shipping logistics now. The key thing to realize above all is just that Donald Trump hates Jeff Bezos because Jeff Bezos owns the Washington Post. This is really not about economics for Donald Trump. This is just a pure personal vendetta. So, I want to preface everything I say with that fact. This is not a good faith economic debate on the part of the White House. This is pure power politics and just vengeance on the president’s part, which is really the only way in which he can frame the world for himself. That’s how he sees the world, is in these very transactional terms.
But anyway, so yes, Trump has been ranting and raving about how the U.S. Postal Service loses money delivering packages for Amazon. He has started referring to USPS as Amazon’s “Delivery Boy,” which is kind of weird. I love that he’s sort of just like anthropomorphized the entire USPS as like this pizza delivery guy.
So he’s decided to direct his ire here, and for what it is worth, he’s not pulling this argument entirely out of nowhere. There has been this long running attempt by the private delivery industry, companies like FedEx and UPS, to argue that USPS is actually subsidizing its package delivery and undercharging everybody, not just Amazon. The number they’ve come up with is about $1.46 per package. In order to explain that number, you have to get into like the mystical aspects of internal accounting at a giant government organization.
I would say it is debatable whether that number is realistic or makes any sense. I don’t really put much stock in it, because again, it’s really about internal accounting and how you allocate costs across an organization when it’s not clear what those costs actually originate from or should correspond to. The point here is that the number kind of comes from a lobbying push by these companies that want USPS to raise its prices so they can either raise their own prices or steal USPS’s business. Again, context is key here.
Then there’s a separate issue about the specific deal that Amazon has with the postal service. It basically gets this bulk delivery rate. They’re not the only ones who get bulk delivery. Big shippers can pay this rates with USPS and negotiate individual contracts. We don’t know exactly what they pay because the public version has been redacted. But now this seems to be the hot argument on Twitter, whether or not USPS should be offering this bulk shipping rates in the first place or charging more.
I’m not going to claim to fully understand it and I don’t think many people in this world really have a full grasp on, you know, whether or not the postal service is appropriately maximizing its profits. But these are the weird places Donald Trump’s Twitter feed has sent us, has sent the econ wonk community. You can argue about whether or not our postal system is really operating at peak efficiency or peak profitability, but in the end Donald Trump’s going to find something to rant and rave at Amazon about and is going to try and undermine their business.
I actually kind of suspect that his ranting and raving is going to make it harder for him to actually take action against them, just because if they try to cancel a contract or something, Amazon’s probably going to sue and say, “Look, this is all political.” That’s my intuition. As usual, I kind of have a hunch that Trump’s desire to tweet whatever the fuck is at the top of his head or the top of his mind is running at cross purposes with his desire to exact vengeance.
How has Trump changed your beat in your reporting? It seems like a lot of times you’re just having to respond to his tweets.
I was talking to an editor the other day about how I sort of rue the moment that Donald Trump became my assignment editor. I thought I worked for Slate! Isn’t that kind of a great image, Donald Trump just like an old-timey newspaper man with a hat, telling his reporter—
“Here’s the next story,” right?
Yeah. I sometimes try to tune it out a little bit, but in the end people want to read this stuff. They want to know what’s going on. These are the big stories right now.
In a lot of ways, I think before Trump, you could try to cover economics with a little less politics, but now, economics is politics. This is an argument that a lot of people had for a long time about how much is it economics, or is it political economics? What’s the relationship between the two? Can you really think of them individually? I think Trump is showing that you really can’t separate them, that these two spheres are just more tied together than ever when you have a president who is sort of trying to exact personal vendettas on business leaders and such, and pick out favorite industries and favorite companies and trying to move the markets with his Twitter feed.
It really highlights the extent to which, you know, business and the economy are deeply tied to what happens in Washington. At the same time it shows how, I think, we’re learning also how some things can work on autopilot. Right? The economy is doing all right right now. You can argue about the reasons for that; some people actually like to give Trump some credit. That’s another debate for another time—the exact effect the tax credits have or haven’t had already on investment or deregulation has had on investment, yada, yada.
But yeah, I think we’re realizing you can have a functioning economy with a very, very erratic individual shooting out missives from his bed in the White House. In a way, it’s sort of the paradox, right? We’re learning how impossible it is to separate politics from the economy. At the same time, you are seeing how the economy can function despite politics. You’re getting a little bit of both at the same time.
You mentioned the moving markets. This year already we’ve seen the stock market go up and down a lot. The common adage is that, you know, the economy is not the stock market, and the stock market is not the economy. But is there anything to be worried about?
I don’t really personally think so. I’m not as much of a markets junkie as some other people. There are folks who will point and say, “Hey, look, if the 200-day moving average of the S&P 500 shows we’re right where we’re supposed to be. Ignore the turbulence.” That’s actually a little bit where I am on things. Stock markets go up, stock markets go down, fundamentally. American companies are getting more valuable over time thanks to things like the tax cuts and the victory of capital over labor. So, tectonic stuff like that. You shouldn’t be invested for the short term anyway, right? My thing is always, don’t have money in the market if you’re going to need it in less than a year. You need to be able to ride this stuff out.
But it is interesting to see a president who is explicitly trying to batter are company’s stock price via tweet. Gabe Sherman had this story in Vanity Fair, I think yesterday, about how Trump’s creeping around the White House asking people, “How can we fuck with him? What can I say next? What can I do to hurt Bezos?” So it is kind of a spectacle, but at the same time, I don’t know, Amazon’s up a bit today.
I sound like I’m being really casual about this, and some people are pretty upset about their 401(k)s at this moment. But I put a bunch of money into my Betterment account at the beginning of March, right before all hell broke loose, so I had some bad timing. I’m trying to just like let it roll off my back. Like, this stuff happens. Hopefully your retirement account will survive. Frankly, I’m more worried about Los Angeles surviving than I am about my retirement account surviving right now. That’s more top of mind for me.
Obviously, Trump is a businessman. Are you surprised by how he’s sort of been managing the country?
No. I don’t think anyone is surprised that this is how he’s running the country. This is how he ran is company, and everyone’s known that for years. The guy is not a Harvard Business School professor, right? He’s been a carnival barker for decades. The polite way to say it is a “showman.” People have known about his sort of dysfunctional, erratic management style since he first went bust in the early ’90s. I sort of grew up with stories about Trump because my grandfather was one of the lawyers who dealt with him bankruptcy back in the day when his casinos went to hell. I guess maybe a little bit of it is having been a New Yorker, and him sort of being this weird local figure, maybe-billionaire, maybe-not, at any given moment.
But yeah, I don’t think anyone is surprised. If you read anything about him before the election, you should have known this was coming. There’s nothing about the way he ran his campaign that suggested he had any ability to run a large organization. If anything, what you see now is that people are saying he’s settled into running the White House the way he ran the Trump organization, just a very small staff and barking out sort of unexpected orders from his desk, that may or may not have any rhyme or reason.
Do you feel optimistic?
That’s a funny question: Am I optimistic? Am I optimistic about the president? No.
About the future.
I’m not optimistic that Trump is going to change. He is who he is, he’s only going to get weirder. He’s an erratic septuagenarian who has nobody who can really tell him “no” at this point. Nobody should expect him to sort of mature into the job. Frankly, I think the press has kind of learned that. That’s great. Remember how early on, every so often he would manage to string together a coherent sentence, “He became president today.” It was always like his bar mitzvah: ‘Today is the day Donald Trump gets his fountain pen.’
So, no, he’s not going to change. Is the country going to weather this? I feel less of the just overwhelming dread in the pit of my stomach that I used to experience semi-regularly at the beginning of this administration. Whether that is just because I’ve sort of adjusted to this as the new normal, and I’ve kind of re pressurized. Maybe that’s what’s happened. Maybe that’s a bad thing. Maybe I’ve just grown numb to it all.
But I do feel like seeing things like the marches, the way people have sort of pushed back, the way progressives are organizing does give me a little bit of hope for not only the midterms but what comes after. To get really sentimental, watching the March for Our Lives and seeing a set of leaders kind of crop up from Gen Z was amazing to me. Just watching kids get up and deliver these speeches in front of an international audience, and god only knows how many hundreds of thousands of people were in D.C. I think it’s impossible not to feel a little bit of hope when you see something like that. So, yeah, despite myself, I do feel glimmers of optimism now and then regardless of what my 401(k) looks like on a given day.
Other than Trump, what stories are you keeping your eye on for the rest of the year?
Economywide, here’s a thing that I am wondering about right now. My impulse is to sort of look for the fly in the ointment. So, things are pretty good in the economy at the moment. I don’t think we’re in a boom. I still think we’re in the process of healing from the damage done by the recession. I think if you look at the idea that we’ve reached full employment, I still find that a little bit silly if you look at certain indicators, even if the Fed is starting to move there.
But I’m sort of already looking for the signs of things getting bubbly. It’s weird. We haven’t completely recovered from the last recession, but I’m looking for signs of irrational exuberance. I think for the last two years, people would point to things like the tech bubble or tech valuations as a sign of a bubble or exuberance. I think it’s a little different. That’s just a sign of there being a lot of money sloshing around, thanks to things like loose monetary policy.
Right now, I’m really looking at how households are reacting. Are households taking on more debt than they can afford? Are households saving anymore, or are they just kind of spending their paychecks as they come in. That kind of stuff, to me, is what can be a warning sign that things might go off the rails, not immediately or even in the medium term, but in several years. You know what they always say: The seeds of the next crash are always sown during the boom.