I have the same issue and it is not the external keyboard because the macBook keyboard also is not responding. When pressing a key you get a beep. I tried to see if there was popup or something blocking it but that wasn't the case. After typing, switching between apps it suddenly started to work again. I have experienced this twice now since upgrading to Sequoia each time when I was using Firefox developers edition. Don't know if it is related but thought I mention it.
PS I recently upgraded to Sequoia and today for the first time in a long time I had to reboot the macBook because the Dock was no longer visible and I couldn't switch to the other desktops. The trackpad was working for the pointer and clicks but the other swipes were not. After a reboot all was working again.