Let's just check the stock market, which I haven't checked in hours, and oh my god, why is everything deep in the red? What happened? Did a nuke just get set off in London? Did that dumb boat get stuck in the Suez Canal again? Did aliens come down from Mars and say we're all getting rounded up to pick frugleberries for their pleasure?
No? (someone whispers in my ear) He did what? (whispering continues) Didn't every single economist say a trade war was a stupid-ass idea given the world's economies are global economies? (whispers) They did and he didn't care? (whispers) So, apparently, U.S. President Donald J Trump, a man who's declared bankruptcy a whopping seven times, tanked the markets because he imposed a 25% tariff on both Canadian and Mexican goods because, well, reasons that aren't readily apparent.
And because of those tariffs, and the retaliatory tariffs those countries plan to impose on the United States, and the retaliatory tariffs President Trump said he'd push through because of those retaliatory tariffs, the markets freakin' tanked and threaten to put the world into a global recession. Again, all because reasons. And then, after all this truly staggering stupidity, the President's Commerce Secretary had to admit that these tariffs might not actually go into effect.
If anyone is feeling dizzy, it's not just you.
Now, I don't normally bring politics into this site apart from advocating heavily for the continued existence of public lands and defending those lands from those who'd see it sold off, disposed of, or generally mismanaged. But President Trump's tariffs affect our powersports industry to a degree that I don't think many people would believe.
Case in point, Polaris is already eyeing surcharges to its lineup.
The brand isn't having the best of times as of late. That's for a variety of reasons, including an expensive lineup and lackluster demand thanks to economic chaos, stagnant wages, a lot of people having already purchased a new powersports machine within the last few years, and weather issues that have tanked the snowmobile market.
And those issues are felt not just by Polaris, but also by others in the space, including rival Can-Am, Harley-Davidson, KTM, and others, which have not properly adapted to the new world order of consumer spending. Hint, hint, folks are still buying powersports stuff, but they're buying the cheaper machines to live within their means.
But the reason that these companies are going to get hit, and hit hard, by President Trump's tariffs—which will then be passed along to you, the consumer—is that a lot of these companies manufacture their products outside the United States. Chiefly, in Mexico or Canada.
Firstly, manufacturing anything inside the U.S. is expensive. Labor here is pricey, as is tooling a factory to build whatever. That's not necessarily a bad thing, as most manufacturing jobs are union jobs and they can help protect workers from mistreatment and slave wages. Elsewhere, that might not be the case. But it is a fact of life, and to pad corporate profits, it's how a lot of these companies do business. More than that, they've been doing this for decades now and have the infrastructure for those factories already built. They employ thousands of workers. And they contribute to those local economies.
Pulling up stakes would doom many, not to mention cost these companies millions to billions of dollars to spin up manufacturing stateside. I mean, you can't just install a tariff and then magically—POOF!—a new American factory appears that's fully staffed and ready to start cranking out powersport machines. These things take time. They take planning. They take a shred of common sense, which apparently isn't common within the White House these days.
I'll say I didn't really think it was common amongst the prior tenants either. But holy crap is this all dumb.
There are machine manufacturing facilities, as well as parts manufacturing facilities, on both sides of the border. The automotive industry relies on both, as does the powersports industry. Even with those which do manufacture a good amount of its machines in the United States, like Polaris, you still have to get parts from Canada and Mexico. You literally can't not!
Which is why Polaris' CEO Mike Speetzen told investors on a call Tuesday that the brand already had a number of what a surcharge would be if ultimately added to its machines. The executive told them that he hopes this trade war would be short-lived, and that Polaris was in the process of adding to existing U.S.-based manufacturing facilities if they weren't, but that'd be more of a long-term solution. Polaris also ramped up production ahead of the tariffs and then shipped those almost finished machines to the U.S. for final assembly and checks. But that'll only get the company so far.
And that's going to be the case for the rest of the industry. Can-Am's parent company BRP, which is Canadian, has plants in both countries. Yamaha has a manufacturing plant in both Mexico and China. CFMoto is Chinese, as is Kove and a handful of others. Honda has a handful of manufacturing plants in Mexico. Harley-Davidson has a plant in Mexico, too.
And there are countless smaller manufacturing sites littered in both countries where parts, accessories, and tooling is made that all need to be shipped stateside for assembly. So even if the machines are built here and employ "Good American jobs", they're still globally sourced and would find a tariff slapped onto its price, which then get passed down to you, the consumer. Because that's how tariffs work. They don't screw the tariffed country, they screw whoever is intending to buy that product. You and me and the rest of the American people.
Suffice it to say, these tariffs aren't going to do the industry good. In fact, they're going to hurt a lot of people, most of which will be consumers. And they're going to put pressure on an industry that's already feeling the pain of inflation, wage stagnation, a forthcoming recession, and climate change. They also might not happen and may just be bluster.
But at least egg prices are down! (whispers) They're $10 a dozen!?
