Trump Signs Executive Order to Create U.S. Sovereign Wealth Fund

Trump Signs Executive Order to Create U.S. Sovereign Wealth Fund, Eyes TikTok Purchase

President Donald Trump signed an executive order on Monday, outlining plans to establish a government-run sovereign wealth fund aimed at economic development, with a potential eye on purchasing the social media app TikTok. This fund, according to Trump, could play a role in boosting U.S. infrastructure and extending the country’s influence globally.

The Sovereign Wealth Fund: Purpose and Goals

The new fund will focus on a range of national priorities, including infrastructure development—such as airports and highways. Additionally, the fund could be used to enhance U.S. presence in strategic locations like Panama and Greenland, helping to expand the country’s geopolitical influence.

U.S. Treasury Secretary Scott Bessent discussed the initiative, stating, “We’re going to stand this thing up within the next 12 months. We’re going to monetize the asset side of the U.S. balance sheet for the American people.” He added that the fund would be composed of both liquid assets and existing domestic resources that would be brought into the fold.

Potential Use of the Fund: TikTok and Beyond

One of the most talked-about uses of the fund is the potential purchase of TikTok. After security concerns led to a brief ban on the app, Trump signed an order allowing TikTok to remain active in the U.S. for 75 days, during which time the company will likely be required to divest itself of its Chinese interests.

The idea of a U.S. sovereign wealth fund isn’t new, though it is more commonly associated with countries with vast natural resources and large fiscal surpluses, such as Norway, China, and Singapore. Unlike these nations, the U.S. has been running significant budget deficits, making the proposal for such a fund a more complex endeavor.

Competing on the Global Stage

Trump’s order aims to ensure that the U.S. can compete with sovereign wealth funds globally, which play a significant role in international financial markets through investments in stocks, bonds, real estate, infrastructure, and private equity. For example, Norway’s sovereign wealth fund is the largest in the world, valued at over $1.7 trillion, while China’s Investment Corp follows with $1.3 trillion.

A U.S. sovereign wealth fund could reduce the nation’s reliance on issuing Treasury debt to fund its activities. According to the executive order, the fund’s goals are to “promote fiscal sustainability, lessen the burden of taxes on American families and small businesses, establish economic security for future generations, and promote U.S. economic and strategic leadership internationally.”

A Development Plan Within 90 Days

Bessent, along with Commerce Secretary nominee Howard Lutnick, will be tasked with developing a strategy for the fund within 90 days. However, critics of sovereign wealth funds caution that without strict governance and transparency, such funds could lead to corruption or conflicts of interest.

A Global Trend: The Pros and Cons of Sovereign Wealth Funds

Sovereign wealth funds are typically established by countries with large reserves of natural resources or significant fiscal surpluses. In addition to their investment activities, these funds are also seen as a way for governments to manage economic stability and future prosperity.

While sovereign wealth funds have proven successful in countries like Norway and Singapore, critics argue that their lack of transparency can lead to governance issues, with potential conflicts of interest or corruption. Proper oversight and governance will be essential to the success of any U.S. fund.

Looking Ahead

With this executive order, the Trump administration has laid the groundwork for a U.S. sovereign wealth fund, which could reshape the nation’s economic landscape, reduce its reliance on debt, and potentially make a global splash with investments like TikTok. How the fund will be structured and implemented remains to be seen, but it will be an initiative closely watched by both domestic and international observers.

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