Trade Compliance

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No Need to Worry in the Event of a U.S. Government Shutdown

Posted December 20, 2018

With political tensions mounting on Capitol Hill after President Trump refused to sign a funding bill that had unanimously passed the Senate because it didn’t include the $5 billion allocation he had requested for his long-desired border wall, it now seems almost certain that the U.S. government is heading for a partial shutdown by the end of Friday.

In an escalating war of words, Trump threatened today to stymie all legislation from Democrats if they wouldn’t provide funding for a wall. “The Democrats, who know Steel Slats (Wall) are necessary for Border Security, are putting politics over Country,” he tweeted. “What they are just beginning to realize is that I will not sign any of their legislation, including infrastructure, unless it has perfect Border Security. U.S.A. WINS!”

If a shutdown does actually materialize just ahead of the holidays, it will be the third one this year, despite Republicans having control of all levers of power, oddly enough. Under the shutdown, which Trump had already vowed to take ownership of in the name of “border security” during a contentious Oval Office meeting with top Democrats, an estimated 800,000 federal employees would be furloughed. The temporary layoff is expected to probably run through Christmas and into the new year, at least until Democrats take control of the House on January 3.

Fortunately for traders however, almost all functions of the U.S. Department of Homeland Security will be unaffected by a government shutdown. U.S. Customs and Border Protection (CBP) personnel are among those considered “exempt”, “essential” or “excepted” as defined in the Anti-Deficiency Act, the relevant legislation cited in connection with a government shutdown when Congress misses a deadline for passing an interim or full-year appropriations bill.

Non-exempt personal (roughly 9% of CBP’s workforce) that may be subject to furlough during a government shutdown would generally affect “non-essential” functions such as planning, research, policy administration, auditing, training, regulatory affairs, etc.

While this means that customs ports should experience minimal service disruptions, clearance delays may still be encountered when other government agencies are involved which may have their resources stretched by trying to maintain all “essential” border-related services with fewer exempt personnel.