President Trump Signed Executive Order Targeting Grid Gear
The order restricts Chinese hardware in US power systems, complicating supply chains for energy-intensive AI data centers.
Updated on Oct. 9, 2026 in Data Centers
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On 26 August 2026, President Donald Trump signed Executive Order 14421, mandating restrictions on critical grid equipment sourced from China. The policy aims to secure national energy infrastructure, specifically targeting components vital to AI data centers and power storage.
Why it matters
The order threatens to constrain the supply chains of energy-intensive AI infrastructure by limiting access to specific foreign-made hardware. It accelerates a shift in procurement toward alternative manufacturing partners to mitigate potential national security risks.
The order covers substation transformers, battery energy storage systems, and inverters. While China currently holds 50% of the lithium-ion battery import market, its share of US transformer and circuit breaker imports is 3% and under 1% respectively.
The players
President Donald Trump
The current President of the United States who signed the executive order to restrict grid hardware.
Hyosung Heavy Industries
A South Korean firm specializing in power grid components and ultra-high-voltage transformers.
The details
The directive aims to protect the domestic grid by restricting hardware such as generation turbines and circuit breakers from entities deemed a security risk. Regulatory agencies must define the scope of ownership restrictions, a process currently underway. This effort follows a period where Chinese inverter exports to the US fell 34% between 2022 and 2025. In preparation for these shifts, manufacturers like Hyosung Heavy Industries have already begun securing contracts with US hyperscalers.
Timeline
2022 to 2025: Chinese inverter export value to the US fell 34%.
12 months to June 2026: Measured period for Chinese import share of grid hardware.
26 August 2026: President Donald Trump signed Executive Order 14421.
15 September 2026: Hyosung Heavy Industries signed US transformer contracts.
24 December 2026: Deadline for federal rulemaking regarding the order.
The Tech Race
Executive Order 14421 formalizes a pivot away from Chinese-sourced grid components to reduce national security vulnerabilities in the US power grid. This move forces hyperscalers to diversify their equipment providers as US inverter capacity aims for 126 gigawatts by 2028.
The order directly affects the procurement workflows of US data center operators who rely on complex battery and transformer hardware. Market participants should expect shifting supply chain costs as providers transition to non-Chinese manufacturing sources like South Korea and Mexico.
The takeaway
The move shifts the procurement strategy for energy-intensive AI infrastructure by de-risking the supply chain. Watch for the 24 December 2026 federal rulemaking deadline to determine how restrictive the definition of Covered Foreign Entity ownership will be for hardware providers.
What happens next
Federal agencies must finalize rulemaking regarding the scope of Covered Foreign Entity ownership by 24 December 2026.
Further reading
For broader trends in infrastructure, explore the latest analysis in Data Centers.
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