US restrictions on Chinese grid equipment threaten to deepen transformer shortage

Restrictions meet an undersupplied market

US Executive Order 14420, which prohibits imports of certain equipment for high-voltage electricity networks from specified countries, could intensify an existing shortage of power transformers. China is expected to face the greatest effect from the measure, according to La Repubblica’s account of an analysis by Wood Mackenzie.

The affected market has recorded more than $22 billion in imports since 2025. The order could cover 24 countries, but China has supplied almost all imports potentially subject to the new restrictions since the beginning of 2025. The concentration means that even a narrowly applied prohibition could remove an important source of equipment from the US market.

Supply was already trailing demand before the new rules. Wood Mackenzie estimates that US power-transformer availability is about 15% below demand in 2026. The corresponding deficit for electrical substations is estimated at around 8%. Further limits on Chinese-made equipment could therefore extend procurement schedules for projects that require transformers and related high-voltage systems.

Large transformers are the main pressure point

The most sensitive segment is large power transformers rated at 100 MVA or more. Demand in this category has grown strongly since 2023, while shortages are already more severe than elsewhere in the market. These units are essential for moving large volumes of electricity and cannot be readily replaced by smaller equipment.

The wider US market for transformers above 10 MVA has expanded by nearly 300% compared with 2020, meaning it has almost quadrupled. That growth has increased competition for manufacturing capacity and made access to additional suppliers more important. Restrictions introduced during such an expansion risk adding another constraint to a supply chain that is already unable to meet total demand.

The figures also indicate that the issue extends beyond individual purchases. Utilities, developers and equipment suppliers must coordinate transformer orders with broader substation construction. A shortage in either category can delay the energisation of an entire project, even when other components are available.

Data centers carry greater exposure

Utilities have largely avoided Chinese suppliers since the first prohibition on high-voltage grid equipment, Ben Boucher, principal supply-chain analyst at Wood Mackenzie, told La Repubblica. Data-center operators, however, have used Chinese equipment to shorten increasingly long delivery times. Boucher therefore expects much of the impact to fall on data centers.

The exposure is greatest in the 100 MVA-and-above category. Data-center developers have purchased these transformers from Chinese manufacturers as an alternative to longer procurement queues elsewhere. Removing or restricting that option could lengthen project schedules and complicate plans to secure the large electricity connections required by new facilities.

Alternative manufacturers may gain additional US orders, but the existing 15% transformer deficit suggests that replacement capacity will not necessarily be available immediately. Buyers may have to reserve equipment earlier, adjust construction sequencing or compete more intensely for production slots.

Implementation remains the key uncertainty

The final market impact depends on how broadly the US definition of “bulk power” is applied to infrastructure supplying data centers. It is not yet clear which facilities and equipment configurations will fall within the prohibition.

The US Department of Energy is expected to determine how the rules will be applied over the next 120 days. That process will decide whether the order affects a limited set of high-voltage installations or a wider group of data-center connections. Until then, developers, utilities and suppliers face uncertainty over eligible equipment, sourcing plans and delivery schedules.