In a week in which the MIC already scored big with Monday's sale of Orbital, today it was the NRA's turn to rejoice, when gun stocks soared on a Reuters report that the Trump administration was preparing "to make it easier for American gun makers to sell small arms, assault rifles and ammunition" to foreign buyers. The stocks of Ruger, Smith & Wesson and American Outdoor brands have all soared by as much as 18% on the news.
According to Reuters sources, aides to President Donald Trump - which these days mostly includes retired army generasl - are completing a plan to shift oversight of international non-military firearms sales from the State Department to the Commerce Department. The difference is that while the State Department is primarily concerned about international threats to stability and maintains tight restrictions on weapons deals, the Commerce Department typically focuses more on facilitating trade, in other words growing it.
“The NSC is working through the interagency process with the State Department and the Department of Commerce to ensure that U.S. industries have every advantage in the global marketplace, while at the same time ensuring the responsible export of arms,” said an official with the White House National Security Council.
And that's how Trump repays the NRA for its support during his campaign: the National Rifle Association spent more than $30 million in support of his candidacy. “I am going to come through for you,” Trump told the NRA convention in April.
He now has.
The new rules will reportedly cut government red tape and regulatory costs, boosting U.S. exports of small arms and creating jobs at home.
“There will be more leeway to do arms sales,” one senior administration official said. “You could really turn the spigot on if you do it the right way.”
The push fits both Trump’s support for the gun lobby espoused on the campaign trail and his “Buy American” agenda.
Critics, among them lawmakers and arms control advocates, have expressed concern that any easing of export rules could make powerful weapons of the type often used in U.S. mass shootings more accessible to criminal gangs and militants that Trump has vowed to fight. Of course, Trump has also vowed to stimulate the economy and having failed to do so so far, will take whatever he can get.
The new rules have been largely finalized according to Reuters, and could be sent to the White House budget office for review within days. The changes which can be implemented without congressional approval could be made public this fall, followed by a period of public comment, with implementation as early as the first half of next year, the officials said. The officials stressed, however, that the proposed shift in oversight was not a blanket deregulation of firearms.
While details are lacking, gun investors are shooting first, so to say, and asking questions much later.
Ironically, the potential foreign boost in sales comes at an awkward time for domestic sales, which have slumped after Obama left the presidency, and took away the persistent threat of gun confiscation. Reuters has more details:
The move, part of a broader Trump administration overhaul of weapons export policy that the officials say is also nearing completion, comes at a time when U.S. gun makers could use the help.
Domestic gun sales have fallen significantly after soaring under President Barack Obama, when gun enthusiasts stockpiled weapons and ammunition out of fear that the government would tighten gun laws.
Since Trump was elected in November, the share price for Smith & Wesson owner American Outdoor Brands Corp is down 50% and Sturm Ruger has fallen 26 percent. And, as the chart below shows, both brands stand to benefit from easier export protocols, alongside Vista Outdoor and the private equity firm Cerberus Capital Management, which owns the Bushmaster AR-15 assault rifle.