U.S. President Donald Trump has signed an executive order mandating the creation of a sovereign wealth fund within the next year, a move that could place the U.S. alongside several nations that have used similar investment vehicles to leverage state-owned assets for economic growth.
The order, issued on Monday, instructs the Treasury and Commerce Departments to submit a proposal within 90 days outlining key aspects of the fund, including its funding mechanisms, investment strategies, governance structure, and operational framework.
While sovereign wealth funds are commonly utilized by nations with significant budget surpluses—such as those in the Middle East and Asia, where they are funded by oil revenues—Trump’s directive raises immediate questions about how such a fund could be established in the United States, which operates at a deficit. The plan’s feasibility remains unclear, as its creation would likely require congressional approval, given the absence of a fiscal surplus to support it.
A New Vision or Economic Gamble?
Trump has long advocated for a government-backed investment fund, previously floating the idea during his presidential campaigns. He envisions it as a means to finance major national projects, including infrastructure development, manufacturing, and medical research. Speaking to reporters, Trump framed the initiative as a bold step toward generating national wealth.
“We’re going to create a lot of wealth for the fund,” he said. “And I think it’s about time that this country had a sovereign wealth fund.”
Treasury Secretary Scott Bessent reiterated the administration’s commitment to launching the fund within 12 months, stating that the government would explore ways to monetize national assets for the benefit of the American people.
“We’re going to monetize the asset side of the U.S. balance sheet,” Bessent said. “There’ll be a combination of liquid assets, assets that we have in this country as we work to bring them out for the American people.”
However, one of the major challenges facing the proposal is how the fund would be financed. Unlike oil-rich nations that use excess revenues from natural resource exports, the U.S. currently runs a budget deficit, making traditional funding sources unavailable. Trump has suggested that the fund could be financed through “tariffs and other intelligent things,” though he has not provided specifics.
Another possibility floated by administration officials is repurposing the U.S. International Development Finance Corporation (DFC), a government agency that partners with private entities to finance development projects. Bloomberg News previously reported that the Trump administration had considered transforming the DFC into a sovereign wealth fund-like entity in recent months. However, such a structural shift would require congressional approval.
Clemence Landers, a former Treasury official now with the Center for Global Development, pointed out the legal limitations of Trump’s executive order.
“Obviously, you can’t establish an institution by executive order, and more to the point, you can’t fund an institution by executive order,” Landers said, underscoring the need for legislative action.
The financial community has reacted with skepticism to the announcement, with analysts questioning the logic of launching a sovereign wealth fund in a country with no fiscal surplus.
“Creating a sovereign wealth fund suggests that a country has savings that will go up and can be allocated to this,” said Colin Graham, head of multi-asset strategies at Robeco in London. “The economic rules of thumb don’t add up.”
There are currently over 90 sovereign wealth funds globally, collectively managing more than $8 trillion in assets, according to the International Forum of Sovereign Wealth Funds. While the U.S. lacks a national fund, some states—such as Alaska, Texas, and New Mexico—operate their own, typically funded by natural resource revenues and used to support public priorities such as education and tax relief.
Could the Fund Buy TikTok?
Trump suggested that the sovereign wealth fund could potentially acquire TikTok, the popular short-video app owned by Chinese tech giant ByteDance. The app’s fate has been uncertain following the enactment of a law requiring ByteDance to sell TikTok’s U.S. operations by January 19 or face a ban on national security grounds.
Since taking office on January 20, Trump has signed an executive order delaying the law’s enforcement by 75 days, pushing the deadline into April. Trump has indicated that discussions regarding TikTok’s future are ongoing and that a decision could be made as soon as February.
“We’re going to be doing something, perhaps with TikTok, and perhaps not,” Trump said. “If we make the right deal, we’ll do it. Otherwise, we won’t… we might put that in the sovereign wealth fund.”
While Trump’s statement left many questions unanswered, his administration’s renewed interest in TikTok comes amid broader U.S.-China tensions. The app, which has about 170 million American users, has long been viewed as a national security risk by U.S. lawmakers concerned about potential data access by the Chinese government.
Notably, reports indicate that the Biden administration had also explored the idea of establishing a sovereign wealth fund before Trump’s election in November. Both The New York Times and the Financial Times reported that Biden aides had discussed potential frameworks for such a fund but had not moved forward with any concrete plans.
Although there is a seeming bipartisan backing, experts stress that without an existing surplus, setting up and sustaining a sovereign wealth fund in the U.S. would be highly complicated. Congress would likely need to authorize substantial new funding, a move that could face significant political hurdles.
