{"id":13327,"date":"2025-10-14T14:02:57","date_gmt":"2025-10-14T14:02:57","guid":{"rendered":"https:\/\/transformer-technology.com\/article-hub\/the-broader-impact-of-tariffs-on-the-power-sector-and-beyond\/"},"modified":"2025-11-18T14:34:46","modified_gmt":"2025-11-18T14:34:46","slug":"the-broader-impact-of-tariffs-on-the-power-sector-and-beyond","status":"publish","type":"article-hub","link":"https:\/\/transformer-technology.com\/article-hub\/the-broader-impact-of-tariffs-on-the-power-sector-and-beyond\/","title":{"rendered":"The Broader Impact of Tariffs on the Power Sector and Beyond"},"content":{"rendered":"\n

Overview of Tariff Impacts <\/strong><\/p>\n\n\n\n

When the latest round of tariffs was announced, it seemed like every call I had that week began the same way: \u201cHave you seen the new tariff list?\u201d<\/strong> The mood across the industry was tense, and for good reason. Few sectors feel the ripple effects of trade policy as sharply as the power sector. Whether it\u2019s transformers, switchgear, or conductors, the U.S. relies heavily on imports from countries such as India, China, Mexico, and South Korea. These regions have long been central to the electrical equipment supply chain. Even for equipment assembled domestically, many of the core raw materials, copper, aluminum, and steel, trace their origins back to global suppliers in Chile, Canada, and India. The result is a uniquely exposed industry, where tariffs not only raise costs but also reshape sourcing strategies, delay projects, and challenge the very economics of the energy transition.<\/p>\n\n\n\n

The interconnected nature of the global supply chain for electrical equipment makes the impact of tariffs especially pronounced. Power transformers serve as a clear example of this complexity. While the U.S. remains a key market for large power transformers, the majority of critical components are sourced internationally.<\/p>\n\n\n\n

Core materials, such as grain-oriented steel, are primarily imported from Japan by suppliers like JFE Steel or Nippon. Copper conductors are sourced from Canada, and insulation oils are obtained from European suppliers. Even when final assembly occurs within U.S. facilities, the dependency on these imported components remains significant.<\/p>\n\n\n\n

Components mostly under Tariff Influence <\/strong><\/p>\n\n\n\n

With new U.S. tariffs on imported steel, transformer-grade GOES (Grain Oriented Electrical Steel) remains one of the most affected components, as nearly 80\u201385%<\/strong> of U.S. demand is still met through imports from Japan, South Korea, and Canada. While Canada enjoys relative exemption under the USMCA, tariffs on Asian imports have driven up core material costs by 20\u201325%, significantly impacting the economics and procurement timelines of transformer manufacturing.<\/p>\n\n\n\n

The recently imposed 50% tariff under Section 232<\/strong> on copper and copper-containing semi-finished products has significantly increased the cost of windings, a vital input for transformers, switchgear, and cables. The U.S. sources a substantial portion of copper materials from Chile, Mexico, and Canada,<\/strong> with Canada again enjoying relative exemption. For imports from Chile and Mexico, tariff-linked cost inflation has been observed, resulting in an overall equipment price increase of 6\u20138%, as copper accounts for roughly 25\u201330% of the total transformer cost.<\/p>\n\n\n\n

Transformer tanks, the most steel intensive part of the equipment, have become a significant bottleneck in the supply chain. Nearly 60%<\/strong> of the tank supply is imported from India, Spain, Mexico, Turkey, and China, all of which are now subject to a 50% steel tariff. These tariffs have made tanks one of the highest risk components across the power equipment value chain.<\/p>\n\n\n\n

Implications for the other sectors <\/strong><\/p>\n\n\n\n