<p>Amazon’s share price suffered more than 5% decline after an Axios report that US President Trump is going after the company on its tax treatment.  We discuss our thoughts below.</p><p><strong><span style="text-decoration: underline;">1. Amazon as a punching bag</span></strong></p><p>US President Trump criticised Amazon on its tax treatment with claims that the company pay “little or no taxes to state &amp; local governments”. This is not the first time Trump has attacked Amazon. Previously, he contended that the share price of Amazon would “crumble like a paper bag” without the support of low tax. </p><p>The controversy on Amazon’s tax treatment is at two levels. First, it is about collecting sales taxes for the local states. Amazon has avoided collecting these taxes until last year. It has since changed this policy by opening a distribution center in 45 states to collect sales taxes from its customers. Secondly, it is about</p><p>collecting sales taxes from companies that sell goods via the Amazon’s website. This account for approximately half of the volume in Amazon. Therefore, any third-party sales tax is likely to be negative for Amazon.</p><p><strong><span style="text-decoration: underline;">2. Bezos is the real target</span></strong></p><p>It is widely recognized that Trump and Amazon CEO Jeff Bezos do not see eye to eye with each other. Bezos was critical of Trump during the 2016 Presidential elections and accused Trump of ”eroding our democracy”.  The Amazon tycoon also owns the Washington Post and the newspaper has been supportive of the ongoing investigation on Trump as a President.</p><p>On the other side, Trump has expressed a strong dislike with Amazon for destroying the retailers. Amazon is disrupting the retail sector and putting many traditional brick and mortar retailers to go bankrupt. This have a knock-on effect to his friends from the real estate sector as these retailers contribute rentals to these landlords.</p><p><strong><span style="text-decoration: underline;">3. </span></strong><strong><span style="text-decoration: underline;">Going after </span></strong><strong><span style="text-decoration: underline;">Amazon could make Trump unpopular</span></strong></p><p>Going after Amazon could make Trump unpopular. Amazon has been a boon for consumers; lowering prices and bringing convenience to millions of consumers. The rise in Amazon share price has also contributed strongly to the US stock market performance. Trump loves a rising stock market as he uses it as a validation of his work as the US President.</p><p>Ironically, Bezos has grown significantly richer with the rise of Amazon’s share price after Trump’s election win. Going after Amazon could make Bezos poorer. But, it could leave Trump with a poorer rating.</p>