The Canada-U.S. trade fight has moved from costly tariffs to something more disruptive for parts of the powersports industry: outright exclusion from the American market. President Donald Trump has signed a proclamation that will prohibit imports of a specific class of Canadian motorcycles—internal-combustion models with engines larger than 800 cc—beginning September 29. Until then, those products remain caught in the 50% Section 338 tariff regime.
At the same time, Washington is reshuffling that tariff list. Beginning September 15, additional Canadian products will face the 50% levy, with the White House specifically identifying all-terrain vehicles among the additions. For Canadian manufacturers, dealers and suppliers, the distinction matters. A 50% tariff can sometimes be absorbed, passed along or engineered around. An import prohibition can close the border to an affected product altogether.
The Motorcycle Ban Has a Very Specific Cutoff
The new U.S. restriction does not ban every motorcycle assembled in Canada. The White House annex identifies one Harmonized Tariff Schedule classification: 8711.50.00. It covers motorcycles, including mopeds, powered by reciprocating internal-combustion piston engines with displacement greater than 800 cc. Smaller-displacement motorcycles and electric motorcycles are therefore not automatically swept into this particular prohibition simply because they come from Canada.
That technical distinction could become crucial at dealerships and distribution centres. A Canadian-built machine with an 800 cc engine falls on one side of the classification line, while a model exceeding 800 cc can fall on the other. Customs classification, rather than marketing labels such as touring bike, roadster or recreational vehicle, ultimately determines treatment at the border. The White House also cautions that its descriptions are informational and that questions about individual products belong with U.S. Customs and Border Protection. For manufacturers, seemingly small specification differences can suddenly have large commercial consequences.
A 50% Tariff Is Turning Into an Import Prohibition
The affected motorcycle category was not previously entering the United States under normal trading conditions. It had already been included in the extraordinary 50% Section 338 duties imposed on selected Canadian products. The September 8 proclamation goes considerably further: imports covered by the motorcycle annex will be excluded from the United States beginning at 12:01 a.m. Eastern Time on September 29.
There is an important transition rule for goods already inside the customs system. Products imported before September 29 but not yet formally entered for consumption, or withdrawn from a warehouse for consumption, remain subject to the existing 50% duty rather than automatically becoming prohibited merchandise. That distinction could make shipping dates unusually important during September. For a distributor with motorcycles already moving through North American logistics networks, a few days could determine whether a unit faces an extremely expensive tariff or cannot be newly imported at all under the proclamation.
ATVs Are Moving Onto the 50% Tariff List
While some large motorcycles are moving from tariffs to exclusion, Washington is expanding the products subject to its 50% Section 338 levy. The White House explicitly says all-terrain vehicles are among the new products replacing items such as rock salt and cement on the tariff list. The changes become effective for covered goods entered for consumption on or after September 15.
The tariff annex provides more detail through customs classifications. It adds HTSUS 8703.21.01, covering certain spark-ignition vehicles with engines no larger than 1,000 cc; the U.S. tariff schedule places three- and four-wheel off-road vehicles with straddle seats and handlebar controls within that classification. The list also adds 8703.10.50, covering golf carts and similar vehicles, a category relevant to some off-road utility machines depending on their configuration. Classification is important because not every side-by-side or utility vehicle necessarily enters under the same code. The result is targeted rather than a blanket 50% tariff on every powersports product.
CUSMA Status Does Not Provide the Usual Escape Route
Canadian manufacturers accustomed to navigating continental rules of origin face another complication: the Section 338 duties are expressly designed to apply even when a covered product qualifies as originating under the Canada-United States-Mexico Agreement. Canadian government guidance confirms there is no CUSMA exemption from the 50% Section 338 tariffs imposed on the listed Canadian goods.
The September modification also makes the tariff picture potentially more expensive by stating that Section 338 duties apply in addition to applicable Section 232 duties. Those sectoral measures already affect some steel-, aluminum- and copper-intensive vehicles. Canadian trade guidance says the existing Section 232 regime can impose rates ranging from 15% to 50% on covered metal products and derivatives, depending on their classification and composition. That means companies cannot simply look at the headline 50% rate and assume it represents their entire customs exposure. For an individual ATV or utility vehicle, the final burden depends on exactly which tariff provisions apply to that configuration.
BRP Is an Obvious Company to Watch
Quebec-based BRP provides the clearest example of why the motorcycle decision matters. The company produces Can-Am on-road and off-road vehicles and had already disclosed that the earlier Section 338 measures were affecting its Spyder product line. During its September earnings discussion, management identified Canadian Spyder imports as being subject to the 50% Section 338 rate.
The new prohibition is defined by customs classification rather than by company or brand, so the White House order does not name BRP or individual Can-Am models. Still, the overlap deserves attention. BRP’s portfolio includes large-displacement three-wheel road vehicles, while the U.S. prohibition specifically covers Canadian-origin motorcycles in HTSUS 8711.50.00 with engines exceeding 800 cc. Importers will therefore need to examine the customs classification and origin of each affected machine rather than assuming an entire product family receives identical treatment. That exercise is considerably more consequential when the outcome is no longer merely a higher tariff bill but potential exclusion from the market.
Tariff Pressure Was Already Visible in BRP’s Financial Results
The latest measures arrive when BRP is already spending heavily to manage U.S. trade barriers. In its fiscal 2027 second quarter, the company reported C$2.237 billion in revenue, up 18.5% from a year earlier, helped largely by increased off-road vehicle shipments and a favourable side-by-side product mix. North American powersports retail sales increased 1%, and BRP reported market-share gains in off-road vehicles.
The profit picture was much less comfortable. Quarterly gross margin fell to 11.7% from 21.1% a year earlier, with BRP identifying Section 232 tariffs on steel, aluminum and copper imports as one of the major pressures, alongside a supplier restructuring. The company also warned that normalized diluted earnings per share in its third fiscal quarter were expected to decline roughly 50% to 60% year over year, mainly because of increased tariff effects. Those figures show why another 50% tariff expansion—and especially an outright motorcycle prohibition—cannot be treated as a minor customs adjustment.
Powersports Supply Chains Run Deeply Across the Border
The dispute matters beyond weekend recreation. Moto Canada, representing major motorcycle and powersports manufacturers and distributors, says the Canadian industry supports approximately 900 dealers and more than 88,000 jobs nationwide. Roughly 140,000 motorcycles, ATVs and side-by-sides are sold annually in Canada, according to the organization, with machines sourced from about 15 countries.
The U.S. connection is particularly large. Moto Canada estimates that 50,000 to 60,000 motorcycles, ATVs and side-by-sides assembled in the United States are sold in Canada each year—around 40% of the Canadian market. The organization has stressed that many off-road vehicles are working equipment as well as recreational machines, used in agriculture, forestry, emergency services and remote transportation. Those figures illustrate the difficulty of isolating one side of the border. Canadian companies sell into the United States while Canadian dealers simultaneously rely on American production, leaving businesses exposed when each government retaliates against the other’s products.
An Obscure 1930 Law Is Powering the Escalation
The legal mechanism behind the motorcycle ban is Section 338 of the Tariff Act of 1930. The statute allows a president, after finding discrimination against U.S. commerce, to impose additional duties of up to 50% ad valorem. More unusually, it also authorizes exclusion of products if the foreign country maintains or increases the discrimination after the initial presidential action and the president determines exclusion is in the U.S. public interest.
For decades, Section 338 was largely a historical curiosity. Reuters reported that Trump’s July tariffs represented its first known use in nearly a century, while legal analysts have described the authority as essentially untested in modern trade litigation. The escalation now demonstrates why the provision is unusually powerful. Washington first imposed the maximum 50% rate, then used the statute’s exclusion authority against selected goods after declaring that Canada had maintained the disputed policies. For affected motorcycle exporters, the progression from expensive market access to no market access is embedded directly in the law’s structure.
Canada’s Retaliation Set Off the Latest Round
Washington’s September 8 actions came hours after Canada’s own counter-tariffs entered into force. Ottawa says those measures cover C$27.6 billion worth of U.S.-origin imports and apply rates of 15%, 25% or 50%, with the government describing the package as a dollar-for-dollar response to the American Section 338 measures. The Canadian list spans steel, aluminum, dairy, appliances, agricultural equipment, electronics and other goods.
Ottawa has paired the counter-tariffs with a C$7.5 billion package of new and enhanced support measures for workers and businesses. Washington responded by changing its tariff list, announcing the import prohibitions and moving against Canadian participation in parts of U.S. federal procurement. The economic relationship remains difficult to separate despite that escalation. Statistics Canada reported that C$50.5 billion of Canada’s C$76.1 billion in merchandise exports went to the United States in July—roughly two-thirds of the total—even as exports to non-U.S. countries reached a record C$25.6 billion.
September 15 and September 29 Are Now the Key Dates
For the powersports business, the next phase arrives in two steps. On September 15, the revised 50% tariff list takes effect, bringing the newly designated ATV-related and other products into Section 338 while removing selected products such as salt and cement. On September 29, the separate import prohibition takes effect for Canadian motorcycles classified under 8711.50.00, turning what had been a 50% tariff problem into a market-access problem.
There is still a diplomatic off-ramp, but no agreement has been announced. Reuters reported that U.S. Trade Representative Jamieson Greer and Canada’s minister responsible for U.S. trade, Dominic LeBlanc, remained in contact and were expected to continue discussions. Meanwhile, the administration’s previously announced threat to increase tariffs on Canadian cars, trucks and automotive parts to 50% beginning January 1 remains another risk hanging over the relationship. For manufacturers and dealers, September’s motorcycle and ATV measures offer a warning: product-level tariff changes can now become outright trade restrictions within weeks.
