US executive order banning Chinese bulk-power equipment set to worsen critical transformer shortage

US Executive Order 14420, banning imported bulk-power equipment from certain nations, in particular China, could impact a market of more than $22 billion in imports since 2025 and test an already stressed supply chain for importers, according to a recent Wood Mackenzie analysis.

The latest order is expected to potentially impact 24 nations. However, the largest impacted nation will be China, which represents almost all bulk power imports since the beginning of 2025.

According to Wood Mackenzie research, power transformers and substations are already in an estimated market shortage of 15% and 8%, respectively, in 2026, and restrictions on the use of Chinese built units is going to further exacerbate the supply chain challenges.

The market that will be most affected is 100 MVA power transformers, which has seen tremendous growth since 2023. In total, for the power transformer market greater than 10 MVA, the market has expanded nearly 300% since 2020.

"Utilities have been largely avoiding Chinese suppliers since the first bulk power ban, and a bulk of the impacts will be centered around data centers who have been using Chinese units to minimize lead times," said Ben Boucher, principal analyst, supply chain, for Wood Mackenzie. "The 100 MVA+ segment is where the shortage is already most acute, and it is precisely where data centers have been turning to Chinese manufacturers to manage lead times.

“However, an important uncertainty remains around the exact scope of the order. It is still unclear how the bulk power definition applies to data center loads, which means the full extent of the impact on that segment of the market could look quite different depending on how the Department of Energy interprets and implements the rules over the next 120 days."