Trump administration moves to stop subsidizing Chinese mail

The Trump administration is moving to raise postage rates for foreign companies that ship packages to the United States.

Some countries, including China, currently benefit from subsidized postal rates set by the Universal Postal Union, a United Nations agency.

On Wednesday, US officials will initiate a withdrawal process from the UPU, which was established in 1874 and has 192 member countries. The process to withdraw will take at least a year, and the administration intends to negotiate new rates with the group during that time.

Under the current rules, the UPU sets lower rates for developing countries. It makes it possible to mail a package from Beijing to New York for less than it costs to send it from San Francisco to New York, for example.

China, Singapore, Germany, France and some other countries benefit from the policy, said a senior White House official on a call with reporters.

The official called the current system a “major economic distortion” that affects trade flows and puts American businesses at a competitive disadvantage.

The move comes as the Trump administration is pressuring China to change its trade practices, which US officials and businesses claim are unfair. President Donald Trump has imposed tariffs on $250 billion of Chinese goods this year.

A White House official on the call said that while China accounts for a large portion of mail coming in at a subsidized rate, addressing the postage issue is not solely about putting more pressure on China.

“This is a situation where the strategy is simply to stop the harm being done through a multilateral organization … not just China,” the official said.

But US businesses have complained about the subsidized shipping rates.

Earlier this year, the National Association of Manufacturers sent a letter to Treasury Secretary Steven Mnuchin urging him to end the “almost unbelievable practice whereby our own postal service subsidizes Chinese imports.”

While the Trump administration intends to negotiate with UPU members, it will also move forward with a domestic process that would allow the US Postal service to set its own rates on international packages. The new rates would at least reimburse the United States for the cost of the service.

The United States already has its own rates in place for packages that weigh more than 4.4 pounds. The new rates would apply to lighter packages and would not take effect for at least six months.

The US Postal Service is struggling financially and facing pressure from the Trump administration to address a revenue shortfall. Last week, it proposed a record increase on the price of stamps.