Tariff Troubles SXS Industry: BRP Faces $40 Million Hit as SXS Industry Feels the Squeeze

BRP’s $40 Million Warning and Slumping Profits

Bombardier Recreational Products (BRP), the Canadian maker of Can-Am off-road vehicles, is sounding the alarm on new U.S. import tariffs. During a March 26 earnings call, BRP revealed it expects the recently imposed tariffs to cost about $40 million in 2025. The announcement follows a difficult fiscal year for the company, as it reported a 21.3% drop in annual revenue to $7.8 billion CAD, down from $9.96 billion the previous year. Profitability took an even steeper dive, with net income plummeting from $931.7 million to just $62.7 million CAD.

With about 60% of its revenue generated in the United States, BRP relies heavily on cross-border trade. Fortunately, the company produces the majority of its U.S.-bound products in Mexico and Canada, allowing it to benefit from the United States–Mexico–Canada Agreement (USMCA) and sidestep the harshest of the new tariffs. According to BRP CFO Sébastien Martel, the company has “limited exposure to imports from China”, and although U.S. tariffs on steel and aluminum do apply, their impact is minimal and mostly affects BRP’s parts and accessories business.

Still, BRP remains cautious. The current USMCA deal is up for review in 2026, and Martel believes there’s a strong chance it could be renegotiated. “Can there be changes to the USMCA? I think yes, that’s a very likely probability,” he said. BRP has successfully adapted to changes in trade agreements in the past and plans to do so again if necessary.

New Tariff Troubles SXS Industry and How They Work

The financial strain on BRP comes in the wake of President Donald Trump’s newly announced “reciprocal” tariffs. Unveiled on April 2, the initiative imposes a 10% blanket import tax on goods from all countries, with some industries facing significantly higher rates. Off-road vehicles, including side-by-sides (SXS) and utility terrain vehicles (UTVs), face a 25% tariff, while imports from China are hit even harder with a total 34% tariff.

Fortunately for companies operating within North America, the USMCA offers a bit of breathing room. Vehicles and components that meet certain North American content thresholds may qualify for full or partial exemption from the 25% tariff. This rule means that if a side-by-side is built in Mexico or Canada using a majority of U.S. components, the effective tariff is significantly reduced.

For example, a vehicle with 50% U.S.-sourced components may only have the remaining 50% of its value subjected to the tariff. This has major implications for manufacturers with cross-border supply chains and provides a strong incentive to use North American parts.

This carve-out is one of the main reasons BRP, with production in Mexico, expects to avoid the worst of the tariff burden. Companies like Polaris, which operates a major off-road vehicle plant in Monterrey, Mexico, are also in a position to benefit from USMCA protections—though not entirely shielded from all costs.

The Broader Impact on the SXS Industry

While BRP is relatively insulated, other players in the SXS and UTV industry are feeling more acute pain. Manufacturers that rely heavily on Chinese-made components or fully assembled imports are hit hardest. Analysts estimate that tariffs on components alone could add up to $400 million annually for Polaris, potentially resulting in higher retail prices.

Brands like CF Moto, Hisun, and ODES, which build machines in China and export to the U.S., now face devastating tariff hikes. Some importers have reported that the tariffs would make it impossible to sell certain vehicles profitably in the U.S. at all.

These rising costs don’t stop at manufacturers—they ripple down to dealers and consumers. Many local dealers, especially those reliant on budget brands imported from China, are bracing for significant losses. For example, CF Moto’s U.S. division has warned that the survival of many small American dealerships depends on some form of tariff exemption.

Some dealers fear they’ll be forced to raise prices or stop carrying certain product lines altogether, while others worry about reduced foot traffic and slowing sales. The situation is especially dire for businesses with limited room to absorb price increases.

Supply Chains Under Pressure

The new Tariff Troubles SXS Industry are also reshaping global supply chains. Manufacturers are now racing to identify and qualify new suppliers in the U.S., Mexico, or tariff-free countries like Vietnam and India. This scramble is not without its challenges—changing suppliers requires time, resources, and often, a complete redesign of parts and processes.

Additionally, companies are exploring increasing domestic production. American-based operations like Textron (Arctic Cat) and American LandMaster, which manufacture their machines in the U.S., are now in a more competitive position. Their products may become more attractive to cost-conscious consumers as imported models become more expensive.

Still, for most brands, moving production isn’t an overnight fix. It requires substantial investment in new facilities, workforce training, and logistics. Some companies are absorbing the costs temporarily, while others are introducing new surcharges or planning MSRP hikes to offset the impact.

What the Tariff Troubles SXS Industry Means for Riders and Buyers

For SXS enthusiasts, the consequences of these tariffs are starting to show in rising prices, fewer promotions, and more limited availability, especially for budget-friendly models. Dealerships are doing their best to maintain affordability, but many warn that price increases are inevitable as the supply chain adjusts.

Riders planning to buy a new machine this year may find themselves facing higher financing costs or choosing lower-tier models than expected. Meanwhile, the used SXS market could become more competitive, as buyers look for alternatives to high-priced new machines.

There’s also a risk that brand loyalty may shift as buyers seek value wherever they can find it. Brands that were once niche or budget-focused may struggle to compete with larger manufacturers that are better equipped to weather the tariff storm.

However, some silver linings remain. Manufacturers are exploring incentives like free accessories, extended warranties, or financing perks to sweeten the deal without lowering base prices. At the same time, domestic manufacturers may see a surge in demand, creating a more diversified and resilient SXS market in the long run.

The Road Ahead for Tariff Troubles SXS Industry

The U.S. powersports industry is entering a period of uncertainty, driven by evolving trade policy and global supply dynamics. The current USMCA rules have provided a vital safety net for manufacturers operating within North America, but with the agreement up for review in 2026, its long-term stability is unclear.

For now, the industry is in adaptation mode. Manufacturers are reassessing their supply chains, dealerships are rethinking inventory and pricing strategies, and consumers are recalculating budgets. The road ahead will be bumpy, but as always, the off-road community is no stranger to navigating tough terrain.

One thing is clear: these tariffs are more than just government policy—they’re reshaping the entire SXS landscape.

Sources

• Powersports Business, “BRP estimates tariffs will cost company an estimated $40 million,” April 8, 2025
• BRP Q4 and FY2025 Earnings Report
• Powersports Business, “BRP reports Q4 and FY2025 results with 19.7 percent revenue drop,” March 27, 2025
• BRP Earnings Call, March 26, 2025
• Motorcycle Industry Council (MIC) Statements
• U.S. Government Tariff Policy Announcements, April 2, 2025
• Industry analyst reports on Polaris and CFMoto tariff exposure
• Interviews with U.S. Powersports dealers and SXS distributors
• Public statements from CF Moto USA
• Trade and supply chain analysis from the Powersports Task Force