IMF's Gopinath Warns of U.S. Debt Challenges Amid Trade Uncertainty

International Monetary Fund's First Deputy Managing Director, Gita Gopinath, has expressed concerns over the sizable U.S. fiscal deficits, urging action to manage the country's growing debt load. In an interview with the Financial Times, she pointed out that, despite recent positive trade actions, high trade policy uncertainty continues to affect the U.S.

This comes in light of the IMF reducing its U.S. growth forecast, attributing the downgrade to the impact of tariffs and potential future trade conflicts. Gopinath emphasized that while the reduction in average tariffs is positive, uncertainties about future rates persist, casting a shadow over economic stability.

Concurrently, President Trump has proposed extending 2017 tax cuts and introducing new tax breaks. However, the nation faces financial pressure as Moody's downgraded its sovereign credit rating, prompted by unresolved fiscal challenges and the burgeoning $36 trillion national debt, highlighting the lack of consensus within U.S. administrations and Congress.

(With inputs from agencies.)