President Donald J. Trump signed an executive order Monday to create a U.S. Sovereign Wealth Fund (SWF) to be used as a diplomatic and economic development tool—and it may allow for the purchase of TikTok.
What is a SWF? It’s essentially a country’s investment account. The nation takes excess revenue and invests it in stocks, bonds, real estate, and other assets. As those assets grow, the profits are used to fund projects like infrastructure or reduce taxes.
The details: Trump’s order directs the Secretary of the Treasury and the Secretary of Commerce to deliver a SWF plan within 90 days “to invest in great national endeavors for the benefit of all of the American people.”
What will it be used for? The order says it will “promote fiscal sustainability, lessen the burden of taxes on American families and small businesses, establish long-term economic security, and promote U.S. economic and strategic leadership internationally.”One major benefit: A SWF would create a pot to pull from in times of emergency [think Covid] for cash rather than adding to our national debt.
Where will the money come from? Critics at the globalist Wall Street Journal point out that nations usually fund their SWFs with budget surpluses, but the U.S. “has significant budget and trade deficits.”This is true. However, Trump has floated using tariff revenues and his executive order suggests using U.S. natural resource reserves as collateral.
TikTok: While signing the executive order, Trump floated having the U.S. government purchase TikTok and using the SWF to fund it: “We’re going to be doing something, perhaps with TikTok… We might put that in the sovereign wealth fund.”
Zoom out: The largest SWF currently belongs to Norway, with $1.74 trillion in assets. China is not far behind with $1.33 trillion. Back in September, Trump suggested the U.S. should approach $2 trillion.
Geopolitics: China uses its SWF as a weapon — funding infrastructure projects in third-world countries to expand its global influence and access to key resources like raw materials.
Big picture: As usual, Trump is thinking five steps ahead. A SWF would not only give the U.S. a financial security blanket. Above, I highlighted that the order specifically says, “promote U.S. economic and strategic leadership internationally.” Trump is building countermeasures against China’s predatory influence.
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