The isolated modular multilevel DC transformer (IMMDCT) plays a critical role in the DC transmission and distribution grids due to its high-voltage and large-capacity power conversion ability. However, the circulating current problem of IMMDCT caused by modular multilevel converter (MMC) structure and quasi-two-level modulation is not well-addressed. In this paper, different components of the capacitor voltage and the arm circulating current under the quasi-two-level modulation are obtained according to the Fourier decomposition. Moreover, the circulating current difference between the IMMDCT and the MMC is compared as well. This paper also reveals the limitations of existing modulation schemes for active circulating current suppression. Based on the above analysis, the multiple passive suppression methods are proposed, where the effectiveness and feasibility of the proposed schemes are verified through MATLAB/Simulink.