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Mnuchin says Amazon's practice of not collecting taxes from third-party sellers doesn't make sense

  • "Amazon pays sales tax on their own account, but doesn't pay it on the third-party business. We don't think that makes sense," Mnuchin tells CNBC.
  • Mnuchin was referring to Amazon's practice of not collecting sales tax from its third-party platform sales outside a select few states.
  • "They've absolutely dominated the retail business, they've put tons of retailers out of business," Mnuchin adds.

Treasury Secretary Steven Mnuchin said Friday the Trump administration doesn't understand why e-commerce giant Amazon does not collect taxes for some of the goods sold through its website.

"Amazon pays sales tax on their own account, but doesn't pay it on the third-party business. We don't think that makes sense," Mnuchin said during an interview on CNBC's "Power Lunch."

President Donald Trump has repeatedly blasted the company for the way it conducts its business, claiming last month that it pays "little or no taxes to state & local governments."

The president's claim stems from Amazon's practice of not collecting sales tax from its third-party platform sales outside a select few states. The practice, Trump alleges, puts "many thousands of retailers" out of business, unable to survive against Jeff Bezos' ever-growing consumer titan.

"It's unfair relative to the [other] retailers," Mnuchin argued. "That's money — by the way — that states need for infrastructure and very, very important for the states' economies."

The third-party business represents roughly half of Amazon's unit sales, according to Stifel.

"They've absolutely dominated the retail business, they've put tons of retailers out of business," Mnuchin said. "The president is focused on Amazon and the economic issues that are impacting retailers all around the country."

In the interview, Mnuchin also said there's a possibility of a trade war with China, but that's not the objective of Trump's tariff moves.