President Donald Trump signed Executive Order 14421 on 26 August 2026 to secure the US power grid from Chinese-made equipment, designating substation transformers, grid-connected inverters, battery energy storage systems, high-voltage circuit breakers, and generation turbines as covered equipment. The order explicitly cites data center and artificial intelligence infrastructure growth as driving the national security rationale.
According to analysis by Rystad Energy, the order’s intended targets in transformers and breakers present limited practical impact. China supplied only 3% of US transformer imports and less than 1% of breaker imports in the 12 months preceding June 2026, as the market had already shifted toward suppliers in South Korea, Mexico, and Canada. These three countries collectively account for 74% of breaker imports and 48% of transformers. South Korean manufacturer Hyosung Heavy Industries disclosed substantial ultra-high-voltage transformer contracts with major US technology companies, indicating that Korean suppliers are gaining market share through domestic US manufacturing capabilities.
Inverter supply chains have also largely transitioned away from Chinese sources. China’s export value of inverters to the US declined 34% between 2022 and 2025, driven by US manufacturing incentives. US inverter production capacity is projected to reach 126 gigawatts by 2028.
Battery storage represents the primary vulnerability. China supplied 50% of US lithium-ion battery imports by value in the 12 months through June 2026, with no alternative supplier approaching comparable scale. South Korea provides 15% of imports and Japan 13%, leaving significant gaps if Chinese supply is restricted. The battery storage issue extends to behind-the-meter systems that data centers use for power resilience, as the order includes uninterruptible power supply systems supporting critical infrastructure.
The order’s impact hinges on rulemaking due by 24 December 2026 defining covered foreign entity ownership. If the definition broadly captures suppliers assembling in South Korea or Mexico using Chinese-controlled components or capital, currently viable alternative supply sources could become restricted, creating shortages across multiple categories simultaneously.
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