WASHINGTON (Reuters) - President Donald Trump said on Friday he was considering merging the U.S. Postal Service with the U.S. Commerce Department, a move Democrats said would violate federal law.

"We're thinking about doing that, and it'll be a form of a merger," Trump said. "It's just been a tremendous loser for this country."

Trump said Commerce Secretary Howard Lutnick and others would examine the postal service. "We think we can turn it around," Trump said.

Democratic Senator Gary Peters said any attempt by Trump to seize control of the postal operation -- which has about 650,000 employees -- and fire its board of governors would be illegal.

Under a 1970 reorganization, USPS was made an independent agency under the executive branch, free of direct political control. An 11-member board of governors, of whom nine are nominated by the president, is in charge while an independent regulator oversees postage rates.

Trump's plan "will harm veterans, small business owners, rural communities, and all Americans who depend on the Postal Service for timely and reliable mail delivery," Peters said.

USPS did not immediately comment on Trump's remarks.

U.S. Postmaster General Louis DeJoy, who was appointed by the board in 2020 as Trump's favored candidate during his first administration, said on Tuesday he planned to step down and asked the board to identify a successor.

USPS has lost more than $100 billion since 2007. DeJoy warned in November it must continue to cut costs or it would face a "government bailout or the end of this great organization as we know it."

As electronic communications have proliferated, the postal service has been hurt by an 80% decline in first-class mail volume since 1997, and it is now at its lowest level since 1968.

In 2022, President Joe Biden extended $50 billion in financial relief over a decade to USPS while Congress separately forgave a $10 billion loan.

The postal service announced a restructuring plan in 2021 that aimed to eliminate $160 billion in predicted losses over the next decade. USPS now projects $80 billion in losses over the period and plans further cuts to address the shortfall.