Trump threatens pullout from postal treaty favoring Chinese shippers

By U.S. EconomyFOXBusiness

China is a problem: Larry Kudlow

National Economic Council Director Larry Kudlow on trade talks with China and U.S. tensions with Saudi Arabia and the Trump administration's efforts to reduce regulations.

The White House threatened on Wednesday to withdraw from a United Nations postal treaty that dates back more than a century, alleging it provides an unfair advantage to Chinese and non-U.S. companies shipping goods into the U.S.

Continue Reading Below

Called the Universal Postal Union, the treaty – first developed in 1874 – allows some countries to ship their goods into the U.S. for a discount at the expense of the Postal Service – which has been bleeding red ink for years – and U.S. manufacturers.

The White House has said it will notify the union on Wednesday that it is beginning the year-long withdrawal process, though senior officials said their end goal is not to withdraw, but rather to renegotiate fairer rates.

Officials said a number of countries were benefitting at America’s expense, especially China, with which the U.S. has been engaged in a protracted trade war under the current administration. Chinese companies take advantage of the lower rate to ship packages into the U.S. for cheap, allowing for as much as a 70 percent discount on small packages arriving from the country, according to officials. That costs the U.S. as much as $300 million.

Officials added it is actually cheaper to send a package between Beijing and New York than it is to send them between some cities domestically.

More from FOXBusiness.com...

The National Association of Manufacturers (NAM) praised the decision on Wednesday, calling the treaty an “anti-US manufacturer subsidy.”

“This outdated arrangement contributes significantly to the flood of counterfeit goods and dangerous drugs that enter the country from China,” NAM President Jay Timmons said. “Manufacturers and manufacturing workers in the United States will greatly benefit from a modernized and far more fair arrangement with China.”

The subsidy cost the U.S. Postal Service $170 million last year, according to NAM, a figure it says is growing at a rate of nearly 40 percent each year.

Meanwhile, in an interview with FOX Business on Wednesday, National Economic Director Larry Kudlow said “China is a problem” when it comes to trade.

“They have not responded to our asks,” he said. “China has got to come back into the world of lawful trading practices.”

President Trump said he did not think China was ready to restart trade discussions.

“I told them, ‘You guys aren’t ready yet, you’re just not ready,’ because look, they’ve been taking $500 billion a year out of our country, it’s time that we stop it,” he told FOX Business.