The US federal government shutdown has entered its fourth week, with some pressure now building to end the impasse. On 27 October, the president of the American Federation of Government Employees, representing more than 800,000 federal and DC government workers, released a statement saying, "it's time to pass a clean continuing resolution and end this shutdown today." The statement is seen as putting pressure to bear on Senate Democrats.

Adding further weight, the Affordable Care Act (ACA) enrollment period begins 1 November with many higher premiums expected, and funding for the Supplemental Nutrition Assistance Program (SNAP) may not be provided into November. While the government shutdown will continue into next week, with the Senate having left Washington until 3 November, there are reports that some Senators are discussing possible options to end the government closure.

A senior Treasury official this week said the government still plans to release a series of year-end notices to implement international tax provisions enacted in the "One Big Beautiful Bill Act" (OBBBA) that are effective in 2025, notwithstanding the government shutdown.

Earlier this fall, an official was quoted as saying that proposed regulations would follow the notices in the first half of 2026.

One such notice expected before the end of the year will address the OBBBA's one-month deferral election in IRC Section 898(c)(2) to provide guidance on allocating foreign taxes between the short year and the succeeding tax year. Another area of planned guidance will address the definition of deduction-eligible income for purposes of the new foreign-derived deduction-eligible income (FDDEI) regime as well as the impact that the OBBBA's new 10% haircut on taxes paid on previously taxed earnings and profits could have on the foreign tax credit. A notice providing guidance on the new pro-rata share rule for Subpart F under IRC Section 951 is also expected.

US House Ways & Means Committee Chairman Jason Smith (R-MO), Subcommittee on Tax Chairman Mike Kelly (R-PA), and Subcommittee on Trade Chairman Adrian Smith (R-NE) on 27 October issued a statement warning that France's proposed increase in its Digital Services Tax (DST) would result in US "aggressive retaliatory actions," if enacted. The congressional leaders called the proposed French action "an unwarranted attack on America's digital companies."

In trade news, the White House on 26 October announced Framework Agreements regarding bilateral trade with Malaysia, Cambodia, Thailand and Vietnam, during President Trump's recent trip to Asia. The Malaysian and Cambodian agreements include commitments by those countries not to impose DSTs "that discriminate against US companies."

The President also indicated there will be an announcement on his recent trade talks with China shortly.

The US-Malaysia reciprocal trade agreement sets the framework from which Malaysia will implement specified customs duties and treatment on US-originating goods. A 19% tariff will continue to be levied on Malaysian-originating goods that are not subject to exemptions. Malaysian-led concessions under the agreement include the prohibition of quantitative restrictions on US-originating goods, the implementation of nondiscriminatory import licensing practices and the removal of technical barriers to trade.

The US-Cambodia reciprocal trade agreement is similar in structure to the Malaysian agreement. The agreement addresses tariffs and non-tariff barriers, with Cambodia committing to apply specified customs duties on US-originating goods. A 19% tariff will continue to be levied on Cambodia-originating goods that are not subject to existing product-by-product exemptions. Cambodia has also committed to eliminate tariffs on 100% of US-originating goods exported to Cambodia. Cambodia will not impose quotas on US-originating goods unless otherwise agreed.

The US-Thailand reciprocal trade agreement framework is similar in structure to the Cambodian and Malaysian agreements. The agreement establishes a framework from which both counties will work to address tariffs and non-tariff barriers. A 19% tariff will continue to be levied on Thai-originating goods that are not subject to product-by-product exemptions. As a baseline, Thailand has committed to eliminate tariffs on 99% of US-originating goods exported to Thailand.

The US-Vietnam reciprocal trade agreement framework provides preferential market access for substantially all US industrial and agricultural exports. A 19% tariff will continue to be levied on Vietnam-originating goods that are not subject to exemptions.

A Global Tax Alert provides details on recent worldwide trade developments.