Topline
President Donald Trump signed an executive order Monday establishing a sovereign wealth fund for the United States and hinted TikTok could be put in the fund, following through on a proposal he floated in September while running for office.
Key Facts
Trump’s order charges the Treasury and Commerce departments to begin the process of creating a sovereign wealth fund—which is a state-owned fund that can invest in stocks, real estate, bonds, hedge funds and more to build a pool of money that can be used to insulate the government from economic stressors.
Secretary of the Treasury Scott Bessent said at the signing the administration will get the fund set up in the next 12 months and it will be a way to “monetize the assets side of the U.S. balance sheet for the American people.”
Details on where the money is coming from to start the fund are not known—money within funds can be sourced from trade surpluses or a budget surplus, though the U.S. has not had a surplus in more than two decades—and creating it will likely require congressional approval.
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What Other Countries Have Sovereign Wealth Funds?
Sovereign wealth funds are more common in non-Western countries like Saudi Arabia, China and the United Arab Emirates. Other countries that have had them include Norway, Kuwait, Singapore, Qatar, Australia and Russia, according to Reuters. The International Forum of Sovereign Wealth Funds reports there are more than 90 sovereign wealth funds in the world that manage more than $8 trillion combined.
What To Watch For
What the fund is used for. Trump hinted his administration could use the fund “for Tik Tok,” saying at the signing: “We’re going to be doing something perhaps with Tik Tok, and perhaps not. If we make the right deal we’ll do it, otherwise we won’t. But I have a right to do that and we might put that in the sovereign wealth fund, whatever we make.” A law banning TikTok in the U.S. if it wasn’t sold by Jan. 19 went into effect under former President Joe Biden, but Trump signed an executive order on his first day in office temporarily pausing the federal ban.
Key Background
Trump mentioned the possibility of creating a sovereign wealth fund in September when he spoke at the Economic Club of New York. He questioned why the U.S. didn’t already have one and said his administration would create one as a way “to invest in great national endeavors for the benefit of all the American people.” At the time, he suggested the fund could be created with “tremendous amounts of money” generated from tariffs “and other intelligent things.” Tariffs were a large part of Trump’s campaign, and he has already made moves to institute tariffs on China and Canada. Tariffs were supposed to be implemented on Mexico, too, but Trump said Monday he spoke with Mexican President Claudia Sheinbaum and came to an agreement to delay the tariffs for one month, in part in exchange for Mexico increasing its forces on the U.S. border.
Crucial Quote
“I think it’s about time that this country had a sovereign wealth fund … I think in a short period of time, we’d have one of the biggest funds,” Trump said from the Oval Office, where he signed the order.
Surprising Fact
Biden’s administration was working on proposing a sovereign wealth fund when he was in office, Bloomberg reported. The fund would have allowed the U.S. to invest in technology and energy, and former National Security Advisor Jake Sullivan reportedly spent months working on what the fund could look like, who would lead it and potential guardrails.
Further Reading
Trump Proposes Sovereign Wealth Fund For U.S.—What To Know About The State-Owned Budget (Forbes)
Trump Tariffs Live Updates: President Admits Prices Could Rise As Canada And Mexico Plan Retaliation (Forbes)
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