Shopify drops almost 8% following report Trump ending China shipping treaty

Shares of ecommerce platform Shopify (SHOP) are down in midday trading after a New York Times report that the Trump administration plans to withdraw from the Universal Post Office Treaty. NEW YORK TIMES REPORT: The paper reported this morning that President Trump plans to withdraw from The Universal Postal Union treaty, a postal treaty from 1874 that has allowed Chinese companies to "ship small packages to the United States at a steeply discounted rate," citing an announcement by the White House. The announcement will "most likely inflame tensions with China," the Times added, although is not clear if China will retaliate if the United States pulls out of the treaty. BAIRD DEFENDS SHOPIFY, CALLS FEARS 'OVERBLOWN': Baird analyst Colin Sebastian, who has an Outperform rating and $165 price target on Shopify shares, noted that Shopify was under a lot of pressure after the New York Times report, but called the fears "way overblown," and noted that Shopify's total exposure in China is low. "Management has previously stated that drop shipping represents a low percentage of GMV... and China inbound volume is a fraction of that small percentage. As such, we believe today's move represents a reaction to headlines, with minimal risks to company fundamentals," the analyst wrote in a research note titled "Fears Around China Shipping Rate Impact Way Overblown." STOCK REACTION: Shares of Shopify are down 7.91% in midday trading.