Dive Brief:

• President Trump ordered the U.S. Postal Service to withdraw from the Universal Postal Union (UPU), a 192-country organization backed by a treaty that sets shipping rates from country to country, favoring developing economies with lower rates, according to multiple reports. 
• The U.S. will adopt "self-declared rates for terminal dues as soon as practical, and no later than January 1, 2020," according to a White House statement. New rates will take at least six months to take effect. 
• Withdrawing from the UPU will take one year, and in that time the State Department will negotiate "bilateral and multilateral agreements" in an effort to resolve what the president views as provisions that advantage foreign mailers over domestic ones. 

Dive Insight:

Withdrawing from the UPU is yet another move in what some trade experts are beginning to see as a wider effort to fundamentally change the U.S.-China economic dynamic, beyond the tariff-centered trade war.

"We’re no longer sure the discussion is about tariffs. Maybe it’s about something else and maybe we’re just waking up to the fact that the trade war is much bigger," said American Apparel & Footwear Association president and CEO Rick Helfenbein at last week's Sourcing Journal Summit. 

The UPU specifically gives favorable terms to items shipped from developing countries weighing under 4.4 pounds, which has filled sites like eBay and Amazon with cheap clothing and other light-weight items at low prices with free shipping, reported Bloomberg. 

In many of these cases, shipping from such items from China to the U.S. is cheaper than shipping the same item domestically. 

"This outdated arrangement contributes significantly to the flood of counterfeit goods and dangerous drugs that enter the country from China," said National Association of Manufacturers (NAM) President and CEO Jay Timmons in a statement supporting the move. "Manufacturers and manufacturing workers in the United States will greatly benefit from a modernized and far more fair arrangement with China."  

Though the UPU is not in favor of Trump's decision, it was not exactly a surprise to the other countries in the union. A Trump administration official told The Wall Street Journal that the administration attempted to renegotiate terms at a UPU meeting in September where the UPU agreed to change rates in 2020, but the administration official categorized this as being "rebuffed."