Privatizing the USPS could harm businesses and disproportionately impact rural areas, experts say

• Donald Trump and Elon Musk have supported privatizing the US Postal Service.
• Trump has also suggested merging the USPS with the Commerce Department.
• Privatization could raise prices, harm rural areas, and affect nonprofits and businesses, experts say.

Both President Donald Trump and Elon Musk have expressed interest in privatizing the US Postal Service, an idea that has long been popular in conservative circles. Such a move, however, could have major downsides.

Experts told Business Insider that privatizing the USPS, an independent agency older than the United States itself, could drive up prices for everyone — and especially harm businesses and nonprofits that depend on the mail, and rural communities that don't have other shipping options.

"Nobody at FedEx or UPS is looking after the public interest," James O'Rourke, who teaches management and organization at the University of Notre Dame and studies the USPS, told Business Insider. "They're looking after the shareholders."

In December, Trump said he was "looking into" privatizing the agency. And in late February, he suggested placing the USPS under control of the Commerce Department.

The USPS has rarely been profitable. It did recently report its first profitable quarter since 2022, but its total loss for the fiscal year ending in September was $9.5 billion, a $3 billion increase from its loss the previous year.

The agency's financial woes led then-Postmaster General Louis DeJoy — who stepped down from his role last week — in mid-March to commit to working with DOGE to make the agency more efficient, including cutting 10,000 jobs and eliminating billions of dollars from the budget.

Higher prices, reduced service to some

If the USPS were privatized, it's not clear if existing laws regulating the agency, like mandating six days of service and universal delivery, would remain in effect.

If a private company were to take over USPS operations and those laws were thrown out the window, it would likely drive up prices, reduce delivery speed and frequency, eliminate service to all addresses, and close some of the over 30,000 USPS offices around the country, said Michael Plunkett, the CEO of the Association for Postal Commerce, which represents mailing and shipping industry companies.

Some communities would "almost certainly" feel more pain than others, Plunkett said.

"There are rural communities that would probably suffer if the postal service were changed in any significant way, especially in the short run," Plunkett said. And that's because "there's no other operator in many small and remote towns in the United States. That's why the postal service does last-mile delivery for other companies in those places."

O'Rourke said that even though the agency isn't as popular as it once was, it should still be treated as an essential public service.

"What concerns me the most is that we become two nations: the haves and have nots," he told BI. "And the gap between the two widens and the services available are no longer available to those who need them just as much as the others."

Significant reforms would also hurt nonprofits and businesses

The nonprofit world still relies heavily on the mail for its fundraising efforts, said Robert Tigner, regulatory counsel at The Nonprofit Alliance, an association that represents and advocates for nonprofits.

If the USPS were privatized and discounted nonprofit mailing rates taken away, there would be a devastating impact on organizations, Tigner said.

"Nobody — even a big organization doesn't have an extra six or seven million lying around in order to continue what it's doing today," Tigner said. "It would cripple the current environment of raising money through the mail."

Its not just nonprofits who would take a hit from higher prices. Any business that relies on the mail for advertising would suffer too, Plunkett said.

"Any major change in how the postal service operates would be sufficiently disruptive that it would cause some companies and nonprofits to go out of business," Plunkett told BI.

Still, some say privatizing has its benefits

The US would not be the first to privatize or reduce its mail service — the UK, Germany, and the Netherlands have privatized their post offices, and Denmark's state-run postal service recently announced it will stop delivering letters.

Chris Edwards, an economist at the Cato Institute, said the US should follow the example set by European countries.

"We don't need another government agency that's adding to our government debt," Edwards said.

He said any compromise from Congress that would pay a private company to cover the costs of offering universal service to every address in the US would still be cheaper than the government fully running the USPS.

Edwards called a possible merger with the Commerce Department "a very stupid idea." Congress, he said, already "micromanages" the agency, and if you add the commerce secretary and the president to that equation, it would make it even more bureaucratic than it already is.

Plunkett and O'Rourke agree with Edwards on one thing: Putting the USPS in the Commerce Department would give Trump much greater authority over the direct operations of the agency.

Any effort from Trump to fire the USPS's Board of Governors and take control of the agency would be illegal, the American Postal Workers Union president Mark Dimondstein argued in a statement last week. But, as we've seen with USAID, that doesn't mean the president can't still do it.

The National Association of Letter Carriers, the American Postal Workers' Union, and the National Rural Letter Carriers Association have been holding demonstrations around the country over the last week to protest cuts to and a potential dismantling of the USPS.

The White House did not respond to a request for comment about Trump's current plans for the agency.