Donald Trump unloads on Amazon – but it could be a good thing
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Donald Trump unloads on Amazon – but it could be a good thing

President Donald Trump is no stranger to controversy. In yet another headline making tweet, the leader of the free world has been causing turmoil in markets again. This time, the object of his ire is Amazon, the ecommerce titan that now accounts for 43% of all annual sales in the U.S. as well as a full half of internet sales growth in the country last year.

Amazon’s share price is up 29% year to date – but Mr. Trump dealt it a blow last week, knocking 6% off

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SOURCE: Yahoo Finance

Exercising his often talked about love for the rapid- fire social network, Mr. Trump tweeted:

“Amazon is doing great damage to tax paying retailers. Towns, cities and states throughout the U.S. are being hurt – many jobs being lost!”

The President has caused similar difficulties for a number of other companies – and even entire sectors, in the case of healthcare – throughout the year. Many of which originated on Twitter. Perhaps his most publicized Twitter rants in recent months, however, have been those against North Korea, such as when he famously stated:

“Military solutions are now fully in place, locked and loaded, should North Korea act unwisely. Hopefully Kim Jong Un will find another path!”

It is not entirely clear that Mr. Trump’s assertions about Amazon are correct. For one thing, Amazon does now collect sales taxes everywhere in the U.S. (since March this year). For another, while the company has undoubtedly displaced many brick-and-mortar retailers, it is a large employer of U.S. citizens (at time of writing, the company has more than 350,000 employees in the U.S.).

Perhaps most important, though, is the likelihood that Amazon will face any kind of anti-trust action may have actually been decreased by Mr. Trump’s tweet. Writing at CNBC, Jake Novak addresses what happens when the President gets too animated on Twitter:

“President Trump has made it personal and we already know how the courts took his personal comments and statements in the immigration ban cases and used them to undermine his administration's case for key border protections. The result was that while the White House won a partial victory in banning most potential immigrants and visitors from a list of six countries, but its impact was weakened because of then-candidate Trump's comments about "banning Muslims."

Given that Amazon is already being discussed in Congress with an eye to anti-trust regulation, Mr. Trump’s tweet may, therefore, have in fact been beneficial to the company – whatever the temporary effect on its share price.

Disclosure

Dominion holds Amazon in its Global Trends Ecommerce Fund.


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The views expressed in this article are those of the author at the date of publication and not necessarily those of Dominion Fund Management Limited. The content of this article is not intended as investment advice and will not be updated after publication. Images, video, quotations from literature and any such material which may be subject to copyright is reproduced in whole or in part in this article on the basis of Fair use as applied to news reporting and journalistic comment on events.