Trump signs order to create the first US sovereign wealth fund, eyes TikTok acquisition

On Monday, President Trump signed an executive order to create the first US sovereign wealth fund. The investment initiative, which is expected to launch in the next 12 months, will be led by the US Treasury Secretary Scott Bessent and Howard Lutnick, who has been nominated to serve as commerce secretary. While details on how the fund will operate are still unclear, Trump has previously suggested using tariffs to help finance some of it and floated the idea of using such a vehicle to be part of a TikTok acquisition.

“The extraordinary size and scale of the US government and the business it does with companies... should create value for American citizens,” Bessent said. “If we are going to buy 2 billion Covid vaccines, maybe we should have some warrants and some equity in these companies and have that grow for the help of the American people.”

To that end, Brad Setser, senior fellow at the Council on Foreign Relations, noted that if the US government received stock or warrants from its 2010 loan to Tesla, the ensuing proceeds could have served as a big capital base for a sovereign wealth fund.

Typically, sovereign wealth funds are established by countries to invest surplus income — often from oil exports or trade surpluses — into financial assets like stocks and real estate, which can build a financial nest egg and offer some diversification in wealth away from the pockets of export strength that help provide the capital for these funds. The world’s largest sovereign wealth fund, Norway’s Government Pension Fund Global, is valued at over $1.3 trillion, followed by Saudi Arabia’s Public Investment Fund at $925 billion. 

This isn’t the first time the US has floated the idea of a sovereign wealth fund, but the country’s $1.8 trillion budget deficit and mounting national debt could create some hurdles in capitalizing it, or suggest that the privatization of other assets would be a part of such a development.