President Donald Trump signed an executive order directing the United States to begin developing a government-owned investment fund. This initiative aims to capitalize on potential profits from TikTok, should a successful American acquisition occur. Trump's ambitious plan, however, faces several hurdles, including the need for congressional approval to establish the fund.
Treasury Secretary Scott Bessent and Howard Lutnick, Trump's nominee for Commerce Secretary, have been tasked with laying the groundwork for this sovereign wealth fund. The U.S., currently without a budgetary surplus typically used to fund such entities, seeks to join over 90 sovereign wealth funds worldwide that manage assets exceeding $8 trillion. Notably, the U.S. already hosts more than 20 state-level sovereign funds, with the largest in Alaska, New Mexico, and Texas financed through oil, gas, and mineral revenues.
The administration's proposal to ByteDance, TikTok's owner, suggests a possibility for the U.S. government to own up to 50% of a new entity combining TikTok's U.S. operations with Perplexity AI, an artificial intelligence startup. This move aligns with Trump's broader vision of a substantial U.S. sovereign wealth fund that could rival Saudi Arabia's in size.
"The extraordinary size and scale of the U.S government and the business it does with companies should create value for American citizens," said Howard Lutnick.
The proposed fund could also engage in profit-earning ventures with vaccine manufacturers, reflecting wider strategic interests beyond social media. Besides Trump’s administration, other investors, including billionaire Frank McCourt and former Treasury Secretary Steven Mnuchin, have shown interest in acquiring TikTok's U.S. operations.
Historically, the concept of a sovereign wealth fund for national security investments has been under study by the U.S. government. However, no substantial action was taken prior to Trump's tenure. The current administration aims to establish this fund within 12 months, marking a significant shift in economic strategy.
Internationally, the London-based International Forum of Sovereign Wealth Funds represents roughly 50 such entities, making the U.S.'s entry into this arena notably significant. While ambitious, Trump's plan underscores the potential economic influence of a federal investment fund aligned with national interests.
