President Donald Trump has signed an executive order directing the creation of a US sovereign wealth fund within the next year, a move that could place the country alongside others like China, Saudi Arabia, and Norway, which use such funds for strategic investments.
Trump also suggested that the fund could be used to acquire the popular social media app TikTok, which faces an impending sale or ban.
“We’re going to create a lot of wealth for the fund,” Trump told reporters. “And I think it’s about time that this country had a sovereign wealth fund.”
The executive order directs the Treasury and Commerce Departments to submit a plan within 90 days outlining key details, including “funding mechanisms, investment strategies, fund structure, and a governance model.”
However, the order does not specify how the fund would be financed—an issue that could prove challenging given the US government’s budget deficit.
Historically, sovereign wealth funds are backed by a country’s surplus revenues, often from natural resources like oil or large trade surpluses.
However, the US runs a budget deficit, raising questions about how the fund would operate. Treasury Secretary Scott Bessent acknowledged the uncertainty but expressed confidence in its potential.
“We’re going to monetise the asset side of the US balance sheet for the American people,” Bessent said. “There’ll be a combination of liquid assets, assets that we have in this country as we work to bring them out for the American people.”
One possibility is converting the US International Development Finance Corp. (DFC), an existing agency that finances projects in developing countries, into a sovereign wealth fund. Bloomberg News previously reported that the Trump administration had explored this option. However, such a move would likely require congressional approval.
Clemence Landers, a former Treasury official now with the Center for Global Development, cast doubt on the feasibility of the plan without legislative backing.
“Obviously, you can’t establish an institution by executive order, and more to the point, you can’t fund an institution by executive order,” Landers said.
In a surprising twist, Trump suggested that the sovereign wealth fund could be used to purchase TikTok. The app’s Chinese parent company, ByteDance, faces a looming deadline under a US law that requires it to sell TikTok on national security grounds or risk being banned.
Trump, who took office on Jan. 20, signed an executive order delaying enforcement of that law by 75 days.
“We’re going to be doing something, perhaps with TikTok, and perhaps not,” Trump said. “If we make the right deal, we’ll do it. Otherwise, we won’t… we might put that in the sovereign wealth fund.”
TikTok has approximately 170 million American users, making it one of the most popular apps in the country. While multiple companies and investors have expressed interest in acquiring the platform, Trump’s suggestion that the government itself could buy TikTok adds a new layer of complexity.
Trump has previously floated the idea of a government investment fund, suggesting it could finance major infrastructure projects, manufacturing, and medical research. However, many experts remain skeptical about whether a US sovereign wealth fund is practical.
“Creating a sovereign wealth fund suggests that a country has savings that will go up and can be allocated to this,” said Colin Graham, head of multi-asset strategies at Robeco in London. “The economic rules of thumb don’t add up.”
Globally, there are over 90 sovereign wealth funds managing more than $8 trillion in assets, according to the International Forum of Sovereign Wealth Funds. Several US states—including Alaska, Texas, and New Mexico—have their own funds, which rely on revenue from natural resources to support public programs.
Whether Congress will approve funding for a national sovereign wealth fund remains to be seen. The Biden administration had reportedly considered a similar idea before Trump’s election in November, according to The New York Times and Financial Times, but no formal plan was put forward.
For now, Trump’s order leaves many questions unanswered, including how the fund would be structured, where the money would come from, and whether it will play a role in TikTok’s future. The Treasury and Commerce Departments have 90 days to deliver their recommendations.
Boluwatife Enome
Follow us on: