As the US shutdown reaches the end of its second week, international pressure is beginning to mount on the US government but the impact on trade is as yet unknown, Chris Williamson, head economist at Markit tells GTR.

However, “the danger is the situation will exacerbate as the shutdown drags on”, he adds.

Trade is not unaffected and US Exim, the US environmental protection agency, as well as almost every other federal agency, have furloughed the majority of their staff.

This reduced service can mean delays in shipments both in and out of the country. Stories have surfaced of orders from companies like Boeing and General Electric being delayed because the funding cannot be processed by US Exim.

With the environmental protection agency and the food and drug administration also operating at a reduced rate, there have been delays in the required inspections of cargos – such as pesticides and other organic materials – which cannot be processed until the inspection is complete.

“Inevitably, there will be more delays and the longer the shutdown goes on the longer those delays will get and people will start switching suppliers,” Williamson points out.

“There is a danger that US companies could start losing out on international trade the longer the shutdown goes on.”

With these federal agencies on a skeleton staff, trade statistics and other quantifiable figures are not being compiled so there will be a delay before the full extent of the impact becomes apparent.

The shutdown has generated significant uncertainty both in the US and around the world.

“There is a lot that is still unknown and there is no question that the shutdown is creating uncertainty for the US economy,” US Chamber of Commerce’s executive vice-president for government affairs, Bruce Josten, comments.

“The Chamber continues to urge Congress and the administration to work together immediately to find a path forward on the continuing resolution and debt limit to remove any threat to the full faith and credit of the US government. This requires compromise by both sides.”

The US has also been forced to cancel trade negotiations. President Obama cancelled his trip to Asia because of the economic shutdown and the free trade pact negotiations between the US and EU have been postponed.

“It’s unfortunate that, as we look to advance a robust trade agenda and conclude the trans-pacific partnership, the shutdown is getting in the way,” Jake Colvin, vice-president of global trade issues at the US National Foreign Trade Council, tells GTR.

But the big danger, Williamson of Markit points out, is not the shutdown but rather the debt ceiling talks and the possibility of a US default, the impact of which could reverberate around the world.