And it could crimp shipments of cheap goods from Chinese manufacturers directly to USA consumers - a practice that many US retailers and small businesses say hurts them.
Two senior White House officials, who spoke under condition of anonymity, informed reporters that Trump hopes to renegotiate the treaty even as it begins to withdraw from the postal union.
Trump generally hasn't been shy about criticizing and rejecting global agreements he feels disadvantage the United States, from NAFTA to North Atlantic Treaty Organisation.
Current shipping rates will continue in force as it takes a year for a country to withdraw from the agreement.
It also comes amid an escalating trade dispute between Beijing and Washington that has resulted in US imposition of tariffs on about $250 billion worth of Chinese goods and the Chinese retaliating with similar punitive taxes on about $110 billion in American products.
China has said it regrets the United States' decision to withdraw from the Universal Postal Union (UPU), in a move some analysts said is further evidence of Washington trying to curtail Beijing's rise.
The report noted that sufficient progress has not been made on reforming terms of the Acts of the Universal Postal Union (UPU) in line with the policies of the United States outlined in the Memorandum.
Trump administration officials say the leg up, granted under a 1969 provision, was meant to promote growth in poor countries.
Trump does not need congressional approval to withdraw because the last version of the treaty was never put up to a vote, administration officials said. "I don't think it's that important at all, but it shows that Trump is obsessed with China's power and will do anything to limit it".
"The low terminal dues rates have always been unfair and distortive, but the rise of e-commerce has ... hurt merchants and created serious political problems in industrialised countries". "It is often possible for a Chinese company to sell "knockoff" products through online vendors, such as Amazon or Alibaba, to USA consumers for less than it costs for American mailers to ship authentic goods". As a result, it can cost more to send a small package - weighing less than 2kg (4.4lbs) - from one American state to another, than from China to the US.
It is not clear how much the disparity costs US taxpayers and retailers, in part because the Postal Service does not release detailed country-by-country shipping breakdowns.
Industry groups, even ones that have questioned the president's tariffs on Chinese imports, applauded the move as proportional and targeted.
National Association of Manufacturers President and CEO Jay Timmons said President Trump "deserves tremendous credit for the administration's focus on eliminating the anti-U.S. manufacturer subsidy China receives from the U.S. Postal Service". After Beijing imposed new duties on $60 billion in American imports, Trump said he would punch back with levies on an additional $267 billion in Chinese goods, effectively placing higher border taxes on everything the United States buys from China.
"Something has to be done", he said.
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