Europe Should Buy Chinese Transformers Now Available Due To Trump’s Trade War

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Last Updated on: 16th April 2025, 01:18 pm

The global clean energy transition has been throttled by an unlikely villain: the humble transformer. This once-overlooked piece of grid infrastructure has become one of the most critical bottlenecks in the race to electrify everything. As wind and solar projects stack up, as data centers expand to meet AI-driven demand, and as utilities struggle to modernize their networks, the availability of transformers — ranging from small distribution units to multi-ton substation behemoths — has become the single point of failure across vast energy systems.

Into this already strained supply landscape, the United States has injected a fresh dose of chaos: a sweeping trade war that places heavy tariffs on transformers from China and, for good measure, nearly every other foreign supplier.

Transformer shortages didn’t come out of nowhere. In the wake of the COVID-19 pandemic, demand for electrical infrastructure surged while manufacturing lagged. Electrification in all its forms —  from EV chargers to rooftop solar, from grid-scale batteries to green hydrogen pilot projects — requires more transformers, and often ones that are custom-built to meet specific grid requirements.

By late 2024, global demand for transformers was more than 20% above pre-pandemic levels, while production capacity had increased only marginally. Lead times exploded. Large power transformers that once took a year to procure began showing estimated delivery windows of three to four years. Even simple residential and industrial distribution transformers — units that utilities used to keep in warehouses by the dozens — became scarce, with lead times stretching from a few weeks to over a year. Prices followed the classic scarcity trajectory: up by 60 to 80% in just a few years.

But the rhetoric of transformer shortages and long timelines is a western problem, not a global problem. The United States, for all its re-industrialization rhetoric, only produces about 20% of the transformers it uses. The rest are imported, from countries like South Korea, Mexico, Canada, and most notably, China. European utilities face similar constraints, with large suppliers like Siemens and Hitachi Energy fully booked out for years.

Procurement officers across the Western world have described the situation in bleak terms: one American utility executive said the backlog was “hair on fire, losing sleep levels of bad.” Projects to connect new renewable energy capacity, replace aging grid components, or expand service to housing developments have been delayed or canceled entirely because no one could get a transformer in time.

In stark contrast stands China, and to a lesser extent, the rest of Asia, which doesn’t have a weird phobia about Chinese transformers. Unlike its Western counterparts, China has spent the past two decades building up a robust domestic transformer industry capable of meeting both its internal needs and a growing export market. With state-owned grid operators rolling out massive HVDC lines and solar mega-projects across the interior, the demand in China is just as fierce, but the supply chains are there to match it. Chinese manufacturers like TBEA, JSHP, and Shanghai Electric have the scale, the workforce, and the materials to produce transformers at speed.

In 2024 alone, China exported more than $2.5 billion worth of oil-immersed transformers, with lead times reported to be under one year for even high-voltage models. While Western utilities were staring at 2027 delivery dates from legacy OEMs, Chinese factories were cranking out orders with their usual efficiency.

That brings us to 2025 and the geopolitical self-immolation otherwise known as the U.S. trade war. Within weeks of taking office, the current administration rolled out a series of aggressive tariffs: currently 125% on imports from China but with White House statements mentioning the potential for 245%, but also on transformers and components from every other country that makes them. Russia doesn’t make them, so the lack of tariffs on Russia won’t help.

The logic, if one could call it that, is rooted in a misguided push for industrial independence — one that pays little heed to actual capacity constraints or timelines. The result has been to effectively price out all foreign transformers just as the U.S. grid demands them most. Whether this move is framed as protectionism or security theater, the reality is that it has made it even harder for American utilities to get what they need.

This is good news for the rest of the world. With the U.S. stepping back from the global transformer market — whether by choice or by tariff — the competition for scarce supply has eased. Chinese manufacturers who once sent 30% of their exports to the U.S. now are looking for new customers in Asia, India and the west. Sensible European buyers will be talking to China’s firms to assess prices and lead times. The trade war, in other words, is reshuffling the supply map, and for many, that’s an opportunity.

Electrification doesn’t wait for policy missteps to be corrected. The urgency of decarbonization, the pressures of urbanization, and the boom in digital infrastructure all continue to drive demand. What changes in 2025 is who gets to move quickly and who is stuck in neutral. The United States, constrained by its own tariffs and its insufficient domestic manufacturing base, will see project slowdowns across the board, including for the factories it wants to reshore, cost escalations, and utilities forced to ration which expansions or replacements to prioritize. Meanwhile, countries willing to source from Chinese suppliers should get delivery windows measured in months, not years. The market imbalance has become a geopolitical lever, and China, with factories running and export markets opening up, is pulling it.

To be clear, this isn’t an argument for blind reliance on any one supplier or country. Electrical grid security, quality assurance, and strategic diversification all matter. But in the face of a global equipment bottleneck, pragmatism matters more. Chinese transformer manufacturers are, for the moment, the only players in the game with spare capacity and the ability to deliver at speed. Blocking access to that capacity, especially without a credible domestic alternative, is not strategic, it’s self-defeating. The U.S. may eventually build out its own transformer factories, with billions now flowing into capacity expansion projects in Virginia, Missouri, and elsewhere. But these will take years to come online, and in the meantime, the gap between demand and supply will only grow.

So while American utilities reshuffle budgets and defer infrastructure upgrades, the rest of the world is quietly benefiting. Quick-acting European grid operators should be placing new orders. While India has maintained transformer manufacturing, it could accelerate electrification with additional Chinese transformers. Southeast Asian nations are moving ahead with renewable interconnections regardless, because they weren’t part of the transformer shortage zone.

It’s one of those moments where a national policy meant to assert control instead cedes it. The U.S. may still see itself as the architect of the modern electric grid, but in 2025, it’s not setting the pace of electrification. That baton passed passed long ago to Europe and now to China. If the end result is that the world electrifies faster, with shorter timelines and better access to essential equipment, then this trade war will have had at least one unintended but welcome consequence.

The irony, of course, is that global decarbonization may accelerate precisely because the U.S. chose to decouple. History, it seems, runs not just on ideology, but on transformers — and right now, the fastest ones to get are made in China.