Trump’s plan for a wealth fund raises questions

US President Donald Trump signed a presidential order on Monday, directing the Treasury and Commerce departments to create an asset fund for government projects and investments, including a potential TikTok acquisition.

In a statement from the Oval Office, Trump said, “Other countries have sovereign wealth funds. They are much smaller countries. They are not the United States. Maybe we will do something with TikTok. Maybe we won’t. We will if we make the right deal… Or if we make a partnership with very rich people.”

Treasury Secretary Scott Bessent informed reporters that the new sovereign wealth fund could be established within the next 12 months. This fund aims to finance large-scale government projects and strategic investments in critical areas like supply chains.

Bessent explained, “We will monetize the asset side of the US balance sheet for the American people. The liquid assets we hold in the US will be a combination of assets, and we will try to unlock them for the American people.”

Sovereign wealth funds in the Middle East and Europe are among the world’s largest institutional investors, providing significant capital for Wall Street firms and the US technology industry. However, these funds are typically established by hydrocarbon-rich countries with large budget surpluses, unlike the US, which faces substantial budget deficits.

According to the International Forum of Sovereign Wealth Funds, over 90 such funds manage assets exceeding $8 trillion worldwide.

During his campaign, Trump suggested using a US fund to finance transport infrastructure like motorways and airports. He also proposed investing in state-of-the-art manufacturing hubs, advanced defense capabilities, and cutting-edge medical research, potentially saving billions on disease prevention.

Howard Lutnick, Trump’s nominee for Secretary of Commerce, stated at the signing ceremony that the sovereign wealth fund could hold securities of companies with large US contracts. He cited bulk purchases of Covid-19 vaccines as an example, suggesting, “Maybe we should have some collateral and equity in these companies.”

Democrats have previously raised the idea of a sovereign wealth fund. Biden administration officials reportedly explored creating such a vehicle last year.

Trump’s plan to use the fund to buy TikTok stems from his earlier proposal for a joint venture giving the US a 50% stake in the application. This proposal shocked Congress members and raised concerns about its legality.

Bessent’s 12-month timeline has led to questions about how Trump will comply with the presidential order granting TikTok a 75-day reprieve while he negotiates a sale.

Trump has expressed interest in having his billionaire allies, including Elon Musk and Larry Ellison, purchase TikTok. He also hinted to reporters that Microsoft was in acquisition talks.