Key Takeaways:
- Continued Essential Operations: Despite the shutdown, essential operations like BIS's Section 232 tariff investigations and USTR's advisory roles will continue.
- Supply Chain Disruptions: The shutdown may cause disruptions in supply chains and delays at ports and borders due to reduced staffing.
- Regulatory Delays: Regulatory and permitting processes will be delayed or paused, affecting rulemaking and public comment periods.
Funding for much of the federal government lapsed today with the start of a new fiscal year. Government funding is supposed to be enacted through passage of 12 annual appropriations bills or, if that has not come to pass by the deadline, a stopgap measure known as a continuing resolution (CR) that will keep funding levels as-is from the previous year for a temporary amount of time. No FY26 appropriations bills have yet been agreed to by both chambers.
The House passed a "clean" (free of any policy changes) CR that would fund the government through November 21, 2025. That bill failed to reach the 60-vote threshold needed for passage in the Senate, with Democrats opposing on a predominantly partisan vote. Senate Democrats offered their own CR that would have rolled back Medicaid cuts, permanently extended enhanced Affordable Care Act tax credits, and limited the capabilities of the Administration to rescind funding already appropriated by Congress. This bill also failed when brought to the floor for a vote.
Each agency publishes contingency guidance for government workers, detailing essential from nonessential work. Here are some of the impacts you should know about for your business operations:
1. Import Investigations and Tariff Implementation Will Continue
The Bureau of Industry and Security (BIS) will continue its Section 232 tariff investigations. The Department cited national security as rationale for this to be deemed essential work. There are ongoing investigations into personal protective equipment (PPE), medical consumables, robotics, and industrial machinery, with more likely.
United States Trade Representative (USTR) will continue advising the President on and administering elements of the International Emergency Economic Powers Act (IEEPA).
Additionally, the USTR will continue to enforce USMCA.
2. Supply Chains Could Be Disrupted
The longer the shutdown drags on, an increase in disruption to international supply chain is highly likely. Potential reductions in staffing by the Customs and Border Protection will lead to delays at ports and borders. With delayed imports, manufacturers could need to adjust inventory levels.
3. Regulatory Delays
Rulemaking of any kind will be delayed or paused until the shutdown ends. This includes the issuance of any proposed or final rules. The Office of the Federal Register (OFR) will continue to publish documents necessary for the protection of life and property.
The handling of public comment periods varies by agency, dependent on contingency plans and furloughed staff. The public is generally able to continue submitting comments during a shutdown, however there will be a delay in receipt and publication. If an agency decides to extend a deadline following the end of a shutdown, it will be posted in a new notice in the Federal Register.
4. Department of Treasury will Continue Many of its Responsibilities.
The agency will continue to support the President with market and economic updates and recommendations. Responsibilities that will continue include, among other things, Critical Infrastructure Protection (CIP) functions; addressing cyber-attacks and other disruptions in the financial system, and various other Government financial obligations; activities related to international market monitoring and oversight of the Exchange Stabilization Fund; ensuring continuity of key regulatory and enforcement actions, including administration and enforcement of economic and trade sanctions.
There will be a lapse in processing of CFIUS cases, routine international engagement, domestic finance, and economic policy.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
