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US Curbs on Chinese Equipment Threaten to Deepen Transformer Shortage, Wood Mackenzie Says

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US restrictions on imports of Chinese bulk-power equipment could deepen the shortage of power transformers and substations, adding pressure to a supply chain struggling to keep pace with surging electricity demand from data centers, Wood Mackenzie strategists said in a note on Monday.

Wood Mackenzie analysts said that the executive order, which restricts the use of bulk-power equipment from certain countries including China, could affect a market representing over $22 billion of imports since the start of 2025.

The order could potentially affect equipment from 24 countries, but China is expected to face the biggest impact, as it has accounted for almost all US bulk-power equipment imports since the beginning of 2025.

Wood Mackenzie said that power transformers are already facing an estimated 15% market shortage in 2026, while substations face an 8% shortfall.

Restrictions on Chinese-built equipment could put further strain on manufacturers and importers as utilities and data center developers compete for limited supplies.

The consultancy said that the 100-megavolt-ampere power transformer segment is likely to be among the hardest hit. Demand for transformers above 10 MVA has surged, with the market expanding about 300% since 2020.

Utilities have largely avoided Chinese suppliers since the first bulk power ban, and the bulk of the impacts will be centered on data centers that have used Chinese units to minimize lead times, said Ben Boucher, principal analyst for supply chain at Wood Mackenzie.

Boucher said the shortage is particularly acute for transformers rated at 100 MVA and above, a segment in which data center operators have turned to Chinese manufacturers to reduce lengthy procurement times.

The impact of the new restrictions will depend in part on how the US Department of Energy defines and applies the term "bulk power" to data center electricity loads.

The executive order gives the department 120 days to develop and implement rules, leaving uncertainty over which equipment and projects will ultimately be covered.

Wood Mackenzie said uncertainty could be significant for the rapidly expanding US data center industry, where developers are racing to secure electricity infrastructure to support growth in artificial intelligence and cloud computing.

Though utilities have already reduced their reliance on Chinese suppliers following earlier restrictions, Wood Mackenzie said data center developers have had greater incentives to use Chinese equipment due to shorter lead times.

The new restrictions could therefore force developers to seek alternative suppliers at a time when manufacturing capacity for large power transformers is already constrained, potentially increasing costs and extending project timelines.

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