BRP Inc. (TSX:DOO) (NASDAQ:DOO) saw its stock price drop roughly 20% on Wednesday after the powersports equipment maker suspended its fiscal 2027 guidance in response to a sudden change to U.S. tariff policy.
The company withdrew its full-year outlook after Section 232 tariffs on steel, aluminum and copper imports into the United States were amended, effective April 6, 2026. Under the revision, a 25% tariff will be applied to the total value of imported snowmobiles and most off-road vehicle models, supplanting the prior approach that imposed a 50% tariff on the applicable metal content only.
BRP estimated that the new tariff calculation method will generate incremental costs in excess of $500 million for the remainder of the year before the company takes any mitigation actions. The firm characterized the change as a material alteration to its cost structure because it imports a substantial portion of its snowmobile and off-road vehicle inventory into the U.S. market.
"Like many manufacturers, we are operating in a highly volatile and unpredictable tariff environment that continues to create uncertainty across the market," said Denis Le Vot, President and CEO of BRP. He said the company expects to manage through the challenge, citing BRP's solid balance sheet, team agility and a strong start to the year as factors that should support the firm as it assesses offsetting measures.
The tariff amendment shifts the basis of calculation from the metal content of applicable products to the full product value, a change BRP said results in a materially higher cost burden compared with the previous metal-content-based approach. As a result, the company has suspended the fiscal 2027 guidance it had previously provided to investors until there is greater clarity on the tariff environment and BRP's ability to implement measures to offset the new charges.
Context and immediate effects
BRP framed the tariff change as an abrupt alteration to the economics of importing key product lines into the United States. Management's public statements focus on evaluating mitigation steps while relying on the company's balance sheet strength and operational flexibility to navigate the increased costs.
What remains uncertain
The company is deferring forward guidance until it can quantify the effectiveness of potential mitigation measures and gain more certainty about the tariff landscape. Until then, investors and stakeholders face uncertainty around BRP's fiscal 2027 results and cash flow implications tied to the estimated incremental expense.