Stocks for major gun makers surged Tuesday after a report surfaced claiming the Trump administration will ease export restrictions on small arms effective next year.
Four senior U.S. officials told Reuters the rule change would shift oversight of commercial arms sales from the State Department to the Commerce Department — giving American manufacturers more leeway to sell guns internationally, creating more jobs stateside and adhering to the president’s “Buy American” policy platform.
“Commerce wants more exports to help reduce the trade deficit. Amd State wants to stop things because it sees (arms) proliferation as inherently bad,” one of the officials, who spoke on a condition of anonymity, told Reuters. “We want to make a decision that prioritizes what’s more important. This will allow us to get in the (small arms sales) game for the first time ever.”
Sturm, Ruger and Co. and American Outdoor Brands — Smith & Wesson’s holding company — closed with double digit increases Tuesday. Vista Outdoor stock likewise gained more than 3 percent. The sudden boost follows a “difficult” summer for gun makers and retailers still standing in the shadow of last year’s record-breaking sales. Since the November election, stocks for Smith & Wesson and Ruger fell 50 percent and 26 percent, respectively. Both companies blame weak demand, with Smith & Wesson’s CEO predicting as much as a 17 percent decline in annual profits through 2018. Ruger’s second quarter net sales dropped 22 percent and its quarterly earnings fell by almost half compared to 2016.
The prospect of eased restrictions, however, could cure the industry’s malaise. Lawrence Keane, senior vice president for the National Shooting Sports Foundation, told Reuters the rule change would boost annual sales by as much as 20 percent.
The details of the new regulations could become public this fall before full implementation in 2018, according to the report.