TLDR
- US government shutdown began October 1, 2025 after Senate rejected Republican and Democratic funding bills
- Hundreds of thousands of federal workers furloughed with Friday’s jobs report canceled
- Dispute centers on healthcare subsidies and Medicaid spending between Trump administration and Democrats
- Bitcoin jumped from $108,650 to $114,000 as investors sought alternative assets
- New 100% tariffs on pharmaceuticals and 25% on trucks took effect simultaneously
The United States government entered a shutdown at 12:01 a.m. on October 1, 2025, following failed budget negotiations in Congress. The Senate rejected both Republican and Democratic spending proposals on Tuesday evening, triggering the first federal shutdown since 2019.
The Republican funding bill sought to extend government operations through November 21. It failed to secure the necessary 60 votes in the Senate. The Democratic proposal included funding through October with over $1 trillion in healthcare spending but was also blocked.
This marks the first shutdown since the 35-day stoppage in 2018-19. That event remains the longest government shutdown in US history.
Why the Government Shut Down
The budget impasse stems from disagreements over healthcare policy and spending cuts. Democrats are pushing to extend expiring healthcare subsidies that provide coverage assistance to millions of Americans. They also want to reverse Medicaid reductions implemented earlier this year.
Republicans oppose the additional healthcare spending in the Democratic proposal. The White House budget director instructed federal agencies to implement shutdown contingency plans after negotiations collapsed.
President Trump stated that “a lot of good can come down from shutdowns” and suggested the government could make irreversible changes during the closure. Senate leaders indicated votes could continue throughout the weekend to resolve the standoff.
Impact on Federal Operations and Economic Data
The Bureau of Labor Statistics ceased operations during the shutdown. The agency’s workforce dropped from 2,055 employees to a single person. This means Friday’s monthly jobs report will not be published as scheduled.
The Commerce Department also suspended operations at the Census Bureau and Bureau of Economic Analysis. Economists rely on this data to track economic health and predict Federal Reserve policy decisions.
Hundreds of thousands of federal workers face furloughs without pay. Essential employees including air traffic controllers and TSA agents must continue working despite suspended paychecks. The 2018 shutdown saw increased unscheduled absences among TSA workers, causing airport delays.
Social Security checks and Medicare benefits will continue during the shutdown. The US Postal Service maintains mail delivery because it operates through stamp sales rather than congressional funding.
Market Reaction and New Tariffs
Bitcoin rallied during the shutdown uncertainty, climbing from $108,650 to nearly $114,000. Gold and silver prices also increased as traders moved toward alternative assets. Polymarket betting odds showed an 85% probability of shutdown before the midnight deadline.
The shutdown coincided with new tariff implementation. The Trump administration imposed 100% duties on branded pharmaceutical products, though companies manufacturing in the US received exemptions. Pfizer secured a three-year grace period through a drug pricing agreement.
Heavy-duty trucks now face 25% tariffs, primarily affecting imports from Mexico. The administration has not clarified whether the United States-Mexico-Canada Agreement provides exemptions.
Trump announced plans for 10% tariffs on lumber and 25% on upholstered wooden furniture starting October 14. Those rates may increase in January.
The Federal Reserve will continue operations during the shutdown because it operates independently. However, missing economic data could complicate interest rate decisions scheduled for late October.
