BRP to feel hit from U.S. ban on Canadian motorcycles

A White House ban on imports of Canadian-made motorcycles into the United States is poised to hit Quebec-based BRP Inc. (DOO-T) as well as a handful of small manufacturers, bringing a trade war between the two countries to the dealership floor.

U.S. President Donald Trump on Tuesday signed orders stopping the import of a broad range of Canadian-made goods, including rye whisky, molasses and motorcycles. The move is a direct response to Ottawa’s latest countertariffs that came into effect this week and cranks up the pressure on Canada to return to the table in trade talks.

BRP, maker of Ski-Doo snowmobiles and Can-Am vehicles, confirmed Wednesday that two of its three-wheel roadster models made at a factory near its headquarters in Valcourt, Que., will be refused entry into the U.S. market starting Sept. 29. The models in question are the Can-Am Spyder and Canyon.

Other Canadian motorcycle companies could also be affected by the U.S. ban but they are niche manufacturers. They include Havoc, a maker of custom luxury performance cruisers.

The impact to BRP’s bottom line for the current fiscal year should be limited because the “vast majority” of production and shipments for the season are already complete, company spokesperson Emilie Proulx said. A third BRP three-wheeler, the Ryker, and its two-wheel motorcycles, are not affected because they’re not made in Canada.

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The White House’s ban on motorcycles hits hardest in Quebec, a vital power base of Prime Minister Mark Carney’s Liberal government. It follows a Canadian import tariff of 50 per cent on U.S.-origin motorcycles, which hit American symbols like Harley-Davidson (HOG-N) and Indian Motorcycle.

“Whatever your politics, powersports is a global supply chain business. When trade policy changes, the dealership eventually feels it,” said Mark Sheffield, an industry veteran who’s currently board adviser to the U.S. National Powersports Dealer Association.

Retailers selling motorcycles will face new issues over availability, pricing, used-bike values and other things with the ban, but the bigger concern might be uncertainty, Mr. Sheffield wrote in post on LinkedIn. “Dealers can manage a known cost. It’s much harder to manage rules that change quickly while inventory is already ordered, in transit, or committed to customers.”

Spyder roadsters were already subject to U.S. Section 338 tariffs of 50 per cent before the White House ban was announced, BRP chief financial officer Sébastien Martel said last week on a call to discuss the company’s earnings for its latest quarter.

During that call, the company said it expects to take a $200-million net hit from tariffs this fiscal year and $225-million next year on products shipped into the United States. That’s far less than the $500-million headwind it had initially calculated for the balance of the year this past spring – a warning that prompted a 30-per-cent drop in its stock price.

Landon French, president of Moto Canada, a trade group representing manufacturers, distributors and retailers of motorcycles and scooters, urged governments in Canada and the United States to remove motorcycles and powersports vehicle products from retaliatory trade measures, saying restricting trade could reduce consumer choice, disrupt supply chains and impose costs on businesses in both countries.

“We’re really calling for both governments to back down and get back to the negotiating table,” he said. “That’s the only way this gets resolved.”