How tariffs could shock America’s power system
As surging power demand from places such as data centers is set to strain the system, transformers, the nuts and bolts of the power system, look particularly vulnerable. Only about 20% of transformer demand can be met by the domestic supply chain, according to Wood Mackenzie, which also estimated that transformer prices have already risen 70% to 100% since January 2020 because of inflation for raw materials such as electrical steel and copper. Assuming that Trump moves ahead with 25% tariffs on Canada and Mexico, and imposes tariffs on copper as well, Wood Mackenzie estimates that transformer prices could increase by an additional 8% to 9%. In 2024, China accounted for over 32% of U.S. low-voltage transformer equipment imports and Mexico accounted for 36% of high-voltage transformer imports, according to Wood Mackenzie. Also worth watching: If the 25% tariffs on steel and aluminum do result in a reshoring of those energy-intensive industries, that itself would add to long-term power demand, notes Seiple.
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