Discussions of privatising the United States Postal Service (USPS) have once again resurfaced amid Donald Trump’s reelection as President of the United States. Back in December, the Washington Post reported that Trump had discussed his desire to privatise the operator with Howard Lutnick, his pick for commerce secretary, at his Mar-a-Lago estate.
USPS has been in trouble for some time – the company is currently undergoing a 10-year overhaul orchestrated by Postmaster General Louis DeJoy which aims to secure financial stability for the company. The plan hoped to record a positive net income in 2023 or 2024, however the company continues to report mounting losses. In the fiscal year 2024, USPS reported a net loss of $9.5bn (2023: $6.5bn). The company largely blames its losses on factors that are outside of USPS’ control, such as “the amortization of unfunded retiree pension liabilities and non-cash workers’ compensation adjustments.”
It’s unclear whether Trump has any specific plans in mind for USPS, but the move slots in well with his overarching campaign to consolidate and cut federal services. In 2018, Trump’s White House proposal suggested selling USPS to private investors or turning it into a public-private hybrid, like many postal service operators in Europe. However, privatising the company will likely take a mammoth effort and an act of Congress, and it is at present unclear how many Republicans will support the move. There are many rural Republican areas in the US that rely on USPS’ universal service obligation to provide them with postal delivery.
Attempts at privatisation could also cause significant disruption to the e-commerce industry in the US. Companies such as Amazon, UPS and Fedex have historically relied on USPS to deliver to rural areas that are not as profitable. Privatisation would likely also have a knock on effect on small and remote businesses that rely on the carrier. A private USPS would likely lead to higher postage and shipping costs and more private-sector influence which may lead to service cuts in rural areas. Ultimately, a private service would be able to reduce services, raise rates and offer less generous pay and benefits to its employees.
Given that there is a large amount of bipartisan support for a public USPS, privatising the company would be a long and likely unsuccessful task. However, although full privatisation may be out of the picture, the new Trump Administration may still attempt to at least decrease government support for the company; sources have told Reuters that Trumps team are considering canceling USPS’s contracts to electrify its delivery fleet, as part of a broader suite of executive orders targeting electric vehicles.
As USPS operates as an autonomous federal agency with its own governing board, canceling these contracts would face significant legal and logistical hurdles. However, what is already evident is that Trump’s second term is poised to continue the turbulent relationship between his administration and the postal service. Whether through direct attempts at privatization or efforts to scale back government support, USPS is likely to remain a battleground in the broader debate over federal services and economic policy.
Author: Nia Hudson
Source: Ti Insight
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