Introduction
In a major economic move, former U.S. President Donald Trump signed an executive order to create a government-run sovereign wealth fund. This fund aims to serve as an economic development tool and could even be used to purchase TikTok, the popular social media platform.
Sovereign wealth funds are usually set up by smaller nations with large natural resources and budget surpluses. The U.S., known for its significant budget deficits, is now considering a similar strategy.
What Is a Sovereign Wealth Fund?
A sovereign wealth fund (SWF) is a state-owned investment fund that is commonly used to:
Invest in infrastructure such as roads, airports, and highways
Strengthen economic influence in foreign regions like Panama and Greenland
Reduce dependence on Treasury debt by leveraging national assets
Countries such as Norway, China, and Singapore have established sovereign wealth funds, with Norway’s being the largest at over $1.7 trillion (Sovereign Wealth Fund Institute).
Trump’s Vision for the Fund
During his presidency, Trump expressed the idea of using tariffs to fund national projects. The newly announced U.S. Sovereign Wealth Fund could help finance “great national endeavors,” as he previously stated.
Key Features of the Fund:
Designed to promote economic sustainability and reduce tax burdens
May help the U.S. government secure economic and strategic influence worldwide
Plans to monetise government assets to benefit American citizens
According to former Treasury Secretary Scott Bessent, the goal is to have the fund operational within 12 months. The government plans to utilise a mix of liquid assets and existing national resources.
TikTok: A Potential Acquisition?
One of the most controversial aspects of this plan is the possibility of using the fund to buy TikTok. The app, which faced security concerns under Chinese ownership, was briefly banned before Trump signed an order allowing it to operate for a limited 75-day period.
Trump suggested that a U.S. government-backed acquisition could ensure data security while keeping the platform accessible to millions of users.
How Will the Fund Be Managed?
The executive order assigns Commerce Secretary nominee Howard Lutnick and Scott Bessent the responsibility of developing a strategy for the fund’s operation. They have 90 days to outline a clear plan.
Potential Sources of Funding:
Tariffs on imports (as suggested by Trump)
Taxes on financial transactions and carbon emissions (used by other nations)
Revenue from government-owned assets
Challenges and Criticisms
While the fund could bring economic benefits, critics argue that:
The U.S. lacks the fiscal surplus typically needed to support a sovereign wealth fund
Poor governance or lack of transparency could lead to corruption and financial risks
A government-controlled investment in social media platforms raises ethical concerns
Historically, sovereign wealth funds invest in stocks, real estate, and infrastructure. However, using one to purchase a private social media platform would be an unprecedented move.
Conclusion
Trump’s executive order marks a bold economic strategy for the U.S. The establishment of a sovereign wealth fund could provide long-term economic stability, reduce national debt dependence, and even lead to the government acquiring TikTok.
However, the fund’s success depends on strong governance, clear funding sources, and transparent operations. In the coming months, all eyes will be on policymakers as they determine the future of this ambitious initiative.
References:
Sovereign Wealth Fund Institute
U.S. Treasury Department Statements
Government Executive Orders Archive