IMF official: U.S. fiscal deficits are "too large," need to be brought down

What they're saying: Gopinath told the FT that Trump's truce with China on tariffs was "a positive development," as was the U.S.-U.K. trade deal, but "very elevated" trade policy was still impacting the world's biggest economy.

• "It is going to take a little while before the effects of all these developments work through the data," she told the outlet.
• Gopinath said it's "absolutely a positive to have lower average tariff rates than the ones we assumed" in April, when the IMF cut its growth forecast for the U.S. and other countries due in large part to Trump's tariffs policy.
• However, she said "there is a very high level of uncertainty, and we have to see what the new rates will be."

Zoom out: The increasing debt is triggered by the U.S. government spending far more than it takes in as revenue, and there's no signs that will change in the foreseeable future, per Axios' Neil Irwin.

• White House officials have said they inherited large deficits from the Biden administration and that their policies of deregulation, tariffs, DOGE spending cuts and pro-growth aspects of the budget bill will help bring them down, Irwin notes.

The bottom line: "The U.S. fiscal deficits are too large and they need to be brought down," Gopinath told the FT.

• "It should be that we have fiscal policy in the U.S. that is consistent with bringing debt to GDP down over time."

Go deeper: Buyers of U.S. bonds are getting nervous