The subsidies provided by the US government

The American farmers are hurt by the current trading tension, especially after China imposes high tariffs on the American farm products including soya beans; to subsidize the farmers to compensate their losses caused by the tension created by the current American administration, the US government announces a $12bn aid for these farmers including soyabean, pork farmers.

There are several questions regarding this aid. Firstly, people may question where the money comes from. Secondly, to what extent the aid can compensate the farmers' losses due to the increasing trading tension. Thirdly, people may ask if other sectors which are also affected by the current tension should also be compensated.

The current US administration holds a strong belief about reducing taxes for individuals as well as companies and the Republican Party believes the economic growth generated by the low tax-rate environment can maintain or even increase the previous tax income. However, their belief could be false, and the national debt can increase due to the reduction in the tax income. Then the aid would accelerate the growth of American national debts and the US government has to increase the cap for its national debt level, this may create some panic in the market.

The effectiveness of this aid depends on the scale and degree of the trading tension. When the trading tension is shallow, the aid can help and even benefit the farmers; however, if the trading tension is getting worse and worse, the aid might not be enough. Moreover, other sectors are also affected by the trading tension besides the agricultural sector. Of course, people can argue because farmers are mostly Trump's supporters, the US administration prioritises farmers' benefits.

To conclude, the aid is large but not enough for clearing up the effect created by the trading tension and could accelerate the US national debt level growth.