In April, the Trump administration overhauled Section 232 duties on goods made with steel, aluminum and copper. Instead of a 50% levy on just the metal portion, certain items "substantially made" with those materials now face a 25% charge on their total value. That translated into a 25% tariff on the full price of snowmobiles and many off-road models, both core lines for BRP. The company warned at the time that the annual impact would top C$500 million and paused its fiscal 2027 guidance, and the stock sank more than 30%.
BRP now projects a C$200 million net tariff effect for the current fiscal year, or about $145 million. Management credits cost optimization, targeted pricing, production improvements, a reduced rate on all-terrain vehicles, and firmer demand for off-road vehicles. For next year, management estimates the net tariff burden will be roughly C$225 million when measured on a full-year basis.
Raymond James Financial's Joseph Altobello, an analyst, said on BNN Bloomberg Television, "The mitigation efforts are working," noting BRP is also gaining share. "They're coming out with some really nice products, some products that are resonating very well in the marketplace. And second, I think they've got some really nice relationships with dealers across North America."
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Headquartered in Valcourt, Quebec, BRP reinstated guidance in May. In its second quarter report released Thursday, it forecast fiscal 2027 revenue in a range of C$5.5 billion to C$5.6 billion and net income of C$160 million to C$195 million, which is less than half of what it had expected before the April tariff changes. Chief Financial Officer Sebastien Martel said the outlook does not "reflect the full earnings potential" of the business. "Over time, we expect our earnings to better reflect this potential as we continue expanding our plan and as the trade environment becomes more stable and predictable."
For the quarter ended July 31, BRP posted a normalized diluted loss of 18 Canadian cents per share, topping the consensus of analysts polled by Bloomberg. Because of tariffs, the company projects normalized EPS will decline by 50% to 60% in the third quarter versus a year earlier. The stock opened higher Thursday in Toronto before dropping as much as 4.3%. Shares were down more than 12% for the year and traded at C$84.64 at 11:37 a.m.
Bank of Canada Governor Tiff Macklem said Wednesday that Canadian firms "are adapting to tariffs, new technology and increased uncertainty," a backdrop that fits BRP's playbook. The company added that under the inaugural use of Section 338 of the U.S. Tariff Act of 1930, the new 50% duties affect just a single model: the three-wheeled Can-Am Spyder.
For your wallet, the takeaway is simple: BRP's hit is smaller than feared, but not gone. Pricing, product demand and the trade setup will steer margins from here, which is exactly where to focus if you care about how much you pay for toys or how steady the earnings are behind them.
