IMF's Gopinath urges US to curb fiscal deficit, FT reports

INTERNATIONAL Monetary Fund First Deputy Managing Director Gita Gopinath said U.S. fiscal deficits are too large and the country needs to tackle its "ever-increasing" debt burden, according to an interview published by the Financial Times on Wednesday.

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Despite some progress like tariff rollbacks and a US-UK deal, trade policy uncertainty continues to affect the US economy.
The IMF cut US growth forecasts due to tariffs, while Moodys downgraded the US credit rating over rising debt and persistent fiscal deficits.
President Trump is pushing to extend and expand tax cuts from his first term, adding to debates on fiscal policy.

Gopinath told the FT that the U.S. was still impacted by "very elevated" trade policy uncertainty despite positive developments such as President Donald Trump's administration rolling back tariffs on China and striking a U.S.-UK economic deal.

In April, the IMF slashed its U.S. growth forecast along with most other countries over the impact of U.S. tariffs, while warning that further trade tensions would slow growth further.

"It is absolutely a positive to have lower average tariff rates than the ones we assumed in [April] . . . but there is a very high level of uncertainty, and we have to see what the new rates will be," Gopinath told the FT.

The comments came as Trump is proposing to extend tax cuts passed in his first term in 2017 and to add new tax breaks.

Moody's also downgraded the U.S. sovereign credit rating last week due to concerns about the nation's growing, $36 trillion debt pile.

The ratings agency cited the failure of successive U.S. administrations and Congress to agree on measures to reverse the trend of large annual fiscal deficits and growing interest costs.