Understanding Trump’s Executive Order on a U.S. Sovereign Wealth Fund

President Trump recently signed an executive order that could pave the way for the United States to create its very first sovereign wealth fund. This is a big deal because, unlike many other countries, the U.S. has never had a sovereign wealth fund before. So, what exactly is a sovereign wealth fund? How might it impact the U.S. economy? And why is TikTok and Bitcoin being thrown into the mix? Let’s break it down in simple terms and explore what this means for Americans.

What Is a Sovereign Wealth Fund?

At its core, a sovereign wealth fund (SWF) is a government-owned investment fund. Countries use these funds to invest surplus money—usually from natural resources or trade surpluses—into assets like stocks, bonds, real estate, or infrastructure. The goal is to generate returns that benefit the country’s economy, fund government expenses, or even reduce taxes for citizens.

Unlike typical government budgets that rely on tax revenues and borrowing, a sovereign wealth fund acts like a giant investment account for the country itself. Norway, China, Saudi Arabia, and others have huge sovereign wealth funds worth trillions of dollars, which they use to invest globally. For example, Norway’s fund is funded by profits from its oil industry and invests in thousands of companies worldwide, including tech giants like Apple and Amazon.

The U.S. and Sovereign Wealth Funds: A New Frontier

The U.S. government currently does not have a sovereign wealth fund. However, 23 U.S. states have their own versions of sovereign wealth funds. Alaska’s fund, for example, is funded by oil and gas revenues and helps finance education and state projects. Other states like Texas have multiple funds that contribute to government operations and tax relief.

President Trump’s executive order signals an intention to start the process of creating a national sovereign wealth fund, but it’s important to note that this is just the beginning of a long journey.

What Does Trump’s Executive Order Say?

The executive order directs the Secretary of the Treasury, Janet Yellen, and the Secretary of Commerce to develop a plan within 90 days for the creation of the U.S. sovereign wealth fund. However, the order does not create the fund itself—that would require Congressional approval.

Key Points from the Executive Order

• The Treasury and Commerce departments are tasked with studying best practices from sovereign wealth funds around the world.
• The plan will explore how to monetize U.S. assets and put them to work for the American people.
• The fund could be composed of a mix of liquid assets and other valuable holdings.
• Congress’s approval is required to move forward beyond the planning stage.

This means the executive order is essentially a formal invitation to explore whether a sovereign wealth fund could work for the U.S., rather than a guarantee that it will happen.

Potential Investments: TikTok and Bitcoin?

One of the most talked-about ideas from President Trump is the possibility that the sovereign wealth fund could invest in or even buy TikTok. This idea gained traction due to ongoing concerns about TikTok’s ownership and data security. Trump mentioned that the U.S. government “might put TikTok in the fund” if the right deal is made.

Why TikTok?

TikTok is a globally popular social media app owned by ByteDance, a Chinese company. The U.S. government has expressed concerns about data privacy and national security risks related to TikTok. By investing in TikTok, the U.S. could potentially gain control or influence over the platform, turning it into a strategic asset.

What About Bitcoin?

There’s also speculation that Bitcoin or other cryptocurrencies could be part of the sovereign wealth fund’s portfolio. President Trump has previously expressed interest in making the U.S. the “crypto capital of the world.” While there’s no official confirmation, experts believe Bitcoin could be included as a high-risk, high-reward asset in the fund.

However, these ideas are still speculative. The fund’s actual investment strategy will depend on the plan developed by the Treasury and Commerce departments, and ultimately on Congressional approval.

Challenges and Questions Ahead

While the idea of a U.S. sovereign wealth fund sounds exciting, especially with high-profile potential investments like TikTok and Bitcoin, there are several key challenges to consider:

1. Where Will the Money Come From?

Most sovereign wealth funds are financed by budget surpluses or trade surpluses. The U.S., however, runs large federal deficits and borrows money to cover expenses. This raises the question: where will the initial capital for the fund come from?

One possibility is that the government could use pre-existing assets—like stakes in companies or federal property—to seed the fund. However, without a clear source of surplus funds, the sustainability of the fund could be a concern.

2. Will Congress Approve It?

The executive order only mandates a plan. For the sovereign wealth fund to become reality, Congress must approve the plan and allocate funds. This could be tricky since politicians generally control federal spending and might be reluctant to cede control to a new investment fund.

Rumors suggest there could be bipartisan support for the idea, but it’s too early to tell. The political feasibility remains uncertain.

3. Managing Risks and Transparency

Managing a sovereign wealth fund requires expert investment decisions, transparency, and safeguards against corruption or mismanagement. The U.S. will have to study best practices globally to ensure the fund operates effectively and benefits the American people.

Lessons from Other Countries’ Sovereign Wealth Funds

Looking around the world, sovereign wealth funds have been used to stabilize economies, fund social programs, and invest in infrastructure. Here are some interesting insights:

• Norway: Their $1.7 trillion fund is the largest in the world, funded by oil profits. It earned a 13% return last year, making $222 billion. It invests in 8,000 companies and includes stocks, bonds, real estate, and infrastructure.
• China: With a $1.3 trillion fund, China uses its sovereign wealth fund to support strategic industries and global investments.
• Saudi Arabia and Abu Dhabi: These nations use their funds to diversify their economies beyond oil.
• U.S. States: Alaska’s fund has helped fund education and government projects without imposing a state income tax. North Dakota deposits 30% of its oil and gas tax revenue into its fund monthly, which it can draw upon to finance projects or offer tax relief.

These examples show that sovereign wealth funds can be powerful tools for economic stability and growth if managed well.

How Could a U.S. Sovereign Wealth Fund Benefit Americans?

If successfully created and managed, a U.S. sovereign wealth fund could:

• Generate additional revenue for the federal government, reducing the need for borrowing.
• Fund infrastructure projects without increasing the national debt.
• Lower taxes or provide tax relief by supplementing government income.
• Invest in emerging technologies and strategic industries to boost economic growth.
• Provide a financial buffer during economic downturns or crises.

In other words, the fund could act as a financial engine working for the American people, turning government assets into productive investments.

What’s Next?

The Treasury and Commerce departments are working on the plan, which is due within 90 days of the executive order. After that, it will be up to Congress to review, approve, or reject the proposal.

This process could take months or even years. Meanwhile, public debate and political negotiations will likely shape the ultimate form and function of the fund.

Final Thoughts

President Trump’s executive order to explore a U.S. sovereign wealth fund is an intriguing development. It signals a new approach to government finances by potentially turning the U.S. balance sheet into an investment vehicle.

However, many questions remain unanswered, from funding sources to political feasibility and investment strategy. TikTok and Bitcoin are exciting possibilities but are far from guaranteed.

Whether you think this is a brilliant idea, risky move, or somewhere in between, it’s clear that the discussion about a U.S. sovereign wealth fund is just getting started.

What do you think? Would you support the U.S. creating its own sovereign wealth fund? Would you want it to invest in TikTok or cryptocurrencies? Drop your thoughts in the comments below!

Thanks for reading, and stay tuned for updates.

FAQ

Q1: What is a sovereign wealth fund?
A sovereign wealth fund is a government-owned investment fund that invests surplus revenues or assets to generate returns for the country.

Q2: Does the executive order create a sovereign wealth fund?
No, it only directs Treasury and Commerce to develop a plan for one. Congressional approval is needed to establish the fund.

Q3: Could the U.S. government buy TikTok through the fund?
President Trump mentioned this as a possibility, but no deal has been made. It’s one potential investment idea.

Q4: Will Bitcoin be part of the fund?
Bitcoin is being considered but is not confirmed. The investment strategy will be determined later.

Q5: How is a sovereign wealth fund funded?
Typically through government budget surpluses or revenues from natural resources. The U.S. may use existing assets but faces challenges due to its budget deficit.