The US on Wednesday announced its intent to withdraw from the little-known UN Universal Postal Union (UPU), arguing that the current system that governs global postal rates allows countries like China to provide subsidies to their postal companies to ship products to the US at cheaper rates thus putting American firms at a disadvantage.
Giving an example, the official said a one-pound package costs domestically about $10 to $13 for a United States business or manufacturer to send, whereas the Chinese mailer, for the last mile, and same distance, one would reimburse about $2.50.
"Consider this: it costs more to ship a package through the US Postal Service from Los Angeles to New York City than it costs to ship that same package from Beijing to New York", Navarro wrote.
President Donald Trump's intention to withdraw from the UPU shows his ignorance toward worldwide order and multilateral governance rules, and is just another trade move against China, Diao Daming, an associate professor of worldwide studies at Renmin University of China, told the Global Times.
The decision to remove the USA from the treaty represents another strike at China in the ongoing trade war, as the Trump administration attempts to force the country to make major economic changes and reduce the United States trade deficit with the country.
Trump isn't the first to see the possibility for economic mischief in postal rate disparities.
USA Today reported 192 countries are part of the Universal Postal Union, which dates to 1984.
"This outdated arrangement contributes significantly to the flood of counterfeit goods and risky drugs that enter the country from China", said National Association of Manufacturers (NAM) President and CEO Jay Timmons in a statement supporting the move.
It is not clear how much the shipping-cost disparity costs US taxpayers and retailers, in part because the Postal Service does not release detailed country-by-country shipping breakdowns.
The United States leaving the treaty means that "taxpayers and U.S. companies (relative to foreign companies) probably benefit; consumers and import-using manufacturers probably get hurt", says Ikenson, adding that he's not sure whether the U.S. will actually leave the treaty or use the "threat of bailing to negotiate better terms for US exporters".
Amazon's prices illustrate the gap: standard shipping for an iPhone case from China to a NY address is $4.99, while from a seller based in the U.S.is $5.99. "It seems like Trump wants to level the playing field and one outcome is that American consumers will have less access to that really cheap stuff".
The UPU said it regrets the move and that it plans to meet with USA officials about the issue. Since 1969, poor and developing countries - including China - have been assessed lower rates than have wealthier countries in Europe and North America.
Established in the 19th century, UPU sets the rules for worldwide mail exchange.
The U.S. says it's willing to renegotiate.
Meanwhile, in an interview with FOX Business on Wednesday, National Economic Director Larry Kudlow said "China is a problem" when it comes to trade.
It was also adopted against the backdrop of escalating trade disputes between Beijing and Washington that led to the imposition of USA duties on imports from China at a cost of approximately $ 250 billion, to which Beijing responded with similar tariffs on American goods worth $ 110 billion.