Magic Trackpad not working since software update

I'm experiencing the same problem. The trackpad shows as connected to the Mac but the Mac does not recognize any input (swiping, or tapping).

I have tried the following:

• Connected via usb-c -> lightning cable to the Mac
• "Forgot" the trackpad in bluetooth settings, waited a few minutes and paired it again
• Confirmed the trackpad works find both wired and wirelessly connected to another Mac

One really weird behavior is that when I turn it off, then turn it back on it will make a clicking noise if tapped when it turns back on. However, as soon as I get the notification on the Mac mini screen that it is connected it ceases to make clicking noises when tapped and all input from the trackpad is ignored. I am able to use other pointing devices connected to usb just fine on the same Mac. It seems like it must be an issue with the OS or a piece of software that is interfering with the trackpad but I have no idea how to track it down and it just started happening recently.

TLDR - Check if you accidentally enabled "Mouse Keys"

So I went through and disabled several login items and background items and uninstalled an application I thought may be interfering with the input. Then I restarted and the trackpad still did not work once I logged in (it would work on the login screen initially).

Luckily I then saw a notification I likely missed previously that "Mouse Keys" was enabled. I was unfamiliar with this feature but it seemed like a potential culprit. I found the toggle for it, turned it off and voila my trackpad works now!

If, like me, you are not familiar with this feature. Here are the steps to disable it:

Click on the  Menu on the left side of the menu bar and select System Settings

Navigate to the Accessibility settings page

Scroll down until you see Pointer Control and click it

Make sure the Mouse Keys option is disabled

Try to turn it off (the switch is on the front), wait 10 seconds or so and turn it back on.