MONTREAL — BRP Inc. shares cratered more than 35 percent on the Toronto Stock Exchange Wednesday after the Canadian maker of Ski-Doo snowmobiles, Can-Am off-road vehicles and Sea-Doo watercraft suspended its full-year fiscal 2027 financial guidance, citing a sudden and severe cost increase from amended U.S. Section 232 tariffs.

BRP Inc
BRP Inc

At mid-morning trading, BRP (TSX: DOO) had fallen C$38.46, or 35.60 percent, to C$69.58. The steep decline wiped out roughly C$2.8 billion in market value in a single session, marking one of the largest one-day drops in the company's recent history. Trading volume surged well above average as analysts rushed to downgrade the stock and investors scrambled to reassess exposure.

The catalyst came late Tuesday when BRP announced it was withdrawing its previously issued fiscal 2027 outlook following changes to U.S. tariffs on steel, aluminum and copper imports that took effect April 6. The revised rules shifted from a 50 percent tariff on metal content only to a flat 25 percent tariff on the total customs value of imported snowmobiles and the majority of off-road vehicle models.

BRP estimates the amendment will generate incremental tariff costs exceeding C$500 million for the remainder of fiscal 2027 before any mitigation efforts. The company, which manufactures in Canada and Mexico and sells heavily into the U.S. market, said the new structure creates significant uncertainty around its cost base and pricing power.

Analyst Reaction Swift and Harsh

Multiple brokerages moved quickly to reflect the new reality. TD Securities downgraded BRP to Hold from Buy and slashed its price target to C$84 from C$119. Canaccord Genuity also downgraded the stock to Hold. Seaport Research Partners and other firms lowered ratings, citing the tariff change as a "major expense headwind" that could pressure margins for years.

Analysts noted that competitors with more U.S.-based production, such as Polaris Inc., may face relatively less impact, potentially shifting market share in the powersports segment. Polaris shares also fell sharply in sympathy on concerns over industry-wide pressure.

Company Context and Prior Strength

The announcement represents a sharp reversal for BRP, which had delivered strong fiscal 2026 results in late March. The company reported revenue of C$8.44 billion, up 6.8 percent year-over-year, with normalized EBITDA of C$1.1 billion and EPS of C$5.21, beating guidance. It raised its dividend and maintained an optimistic tone heading into fiscal 2027 with targeted 5-8 percent revenue growth.

That outlook is now on hold. Management said it will provide an updated view once the full implications of the tariffs and potential mitigation strategies — such as pricing adjustments, supply chain shifts and cost-cutting — become clearer. BRP emphasized that it remains committed to long-term growth but acknowledged the near-term uncertainty.

Broader Industry and Economic Implications

The powersports sector has already navigated supply chain issues, inflation and shifting consumer demand. The new tariff regime adds another layer of pressure at a time when many buyers are sensitive to price increases. BRP's products, popular for recreational and utility use, could see reduced demand if retail prices rise to offset costs.

Economists and trade experts say the Section 232 changes, part of broader U.S. efforts to protect domestic manufacturing, are rippling through North American supply chains. Companies with cross-border operations face higher input costs and compliance complexity. For BRP, with significant U.S. sales but production outside the country, the impact is particularly acute.

Investor and Market Reaction

The stock's plunge reflects investor fears of margin compression and potential demand destruction. Some value investors may see the sell-off as overdone if BRP can successfully pass on costs or relocate production over time. Others worry the uncertainty could linger, weighing on the shares for months.

BRP has a history of resilience, having weathered previous trade disputes and pandemic disruptions. The company maintains a solid balance sheet and has been active with share buybacks. However, the magnitude of the tariff exposure — potentially more than 10 percent of recent annual revenue — has shaken confidence.

What's Next for BRP

Management plans further updates as it evaluates mitigation options, including possible manufacturing adjustments and pricing strategies. The next earnings report, expected in late May or early June for the first quarter of fiscal 2027, will be closely watched for early signs of tariff impact and any revised outlook.

For now, the sharp sell-off has left BRP trading at levels last seen during earlier market corrections. Whether the stock stabilizes depends on how effectively the company navigates the tariff environment and whether broader powersports demand remains resilient.

The episode underscores the vulnerability of integrated North American manufacturing to sudden trade policy shifts. For BRP investors, Wednesday's dramatic move serves as a reminder that geopolitical and policy risks can rapidly reshape even strong fundamental stories in the consumer discretionary space.