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Workers place the decal on their ski-doo on the assembly line making snowmobiles at BRP Inc., in Valcourt, Que.Christinne Muschi/The Globe and Mail
Ski-Doo maker BRP Inc. has suspended its financial forecast for the coming fiscal year, warning it faces an estimated hit worth several hundred millions dollars from new changes the United States has made to its tariff policy.
The Valcourt, Que.-based company said in a news release late Tuesday that a recent amendment by the Trump administration of Section 232 tariffs on steel, aluminum and copper imports that came into effect April 6 results in a 25 per cent levy on the total value of its snowmobiles sold into the U.S. and also affects the majority of its offroad vehicle models sold into the country.
BRP estimates the potential hit to its business to be at least $500-million for the remainder of the year, before any mitigation measures that could offset those costs. The company is three months into its fiscal 2027.
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“Like many manufacturers, we are operating in a highly volatile and unpredictable tariff environment that continues to create uncertainty across the market,” BRP Chief Executive Denis Le Vot said in a statement. “Despite the material burden of these tariff changes, we expect that, with our solid balance sheet, the agility of our teams and the strong start of the year, we will be able to manage our business through this challenge and continue to push BRP forward.”
The White House said earlier this month it would modify its import tariffs on finished products made with steel, aluminum and copper in an effort to simplify compliance.
A presidential proclamation ordered that such products will now be hit with a 25 per cent tariff on the entire value of the finished good that contains any of the three metals. Previously, the duty was 50 per cent on the value of the metal itself that was used in the product.
Industry players such as Canadian steel structures maker ADF Group have been warning that the net impact of the new changes could mean higher costs for manufacturers exporting into the U.S. That’s clearly what BRP has concluded for its own business.
“The magnitude of the impact is mind-blowing, but it is likely the worst case scenario,” Stifel analyst Martin Landry said in a research note to clients, noting the projected hit represents about 60 per cent of BRP’s earnings before interest, taxes, depreciation and amortization on an annual basis.
BRP’s rivals will also be hurt by the new tariff structure, Mr. Landry noted. He predicted that the price of vehicles would likely go up to offset the added costs.
It’s a sudden and unexpected challenge for Mr. Le Vot, a French engineer with a career in the automotive industry who started as BRP CEO on Feb.1. Barely three weeks ago, he was expressing optimism and saying BRP was poised for revenue and profit growth in the year ahead as the company reported net income of $45.8-million on revenue of $2.5-billion.
The Quebec manufacturer, whose other brands include Can-Am and Lynx, does almost all its production at factories in Mexico and Canada. Its biggest market is the United States.
U.S. tariffs on imports of steel and aluminum, which are also applied to products made from the metals, were already delivering a modest bite into BRP’s financials. But this new change represents a much bigger blow.
