Trump Targets TikTok: New Sovereign Wealth Fund in the Works

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A Plan to Leverage a Sovereign Wealth Fund for Strategic Investments, Including TikTok

Former U.S. President Donald Trump has signed an executive order to establish the nation’s first sovereign wealth fund, signaling a major shift in U.S. financial strategy. The fund is poised to tackle critical issues such as national security, infrastructure investment, and even the ongoing controversy surrounding the Chinese-owned video platform, TikTok. If successful, this initiative could reshape global industrial and financial markets.

On February 3 (local time), Trump signed the executive order at the Oval Office in Washington, D.C., accompanied by Treasury Secretary Scott Besant and Commerce Secretary Howard Lutnick. The order requires the Treasury and Commerce Departments to present a detailed plan for the sovereign wealth fund within 90 days. These funds typically use state-owned assets to generate revenue through diversified investments, offering a potential solution to pressing economic challenges.

Trump specifically suggested that TikTok could be integrated into the fund, saying, "We could include TikTok in the sovereign wealth fund depending on how the issue is resolved." Last month, Trump issued a temporary 75-day suspension of the "TikTok Ban Act," which requires the Chinese parent company, ByteDance, to sell its U.S. operations or face a ban. Trump has proposed allowing TikTok to continue operating in the U.S. if 50% of its equity is transferred to American ownership. Analysts believe the creation of the sovereign wealth fund could be a vehicle to acquire this stake.

U.S. Plans to Rival Saudi Sovereign Wealth Fund

Trump also claimed that the proposed U.S. sovereign wealth fund could surpass the scale of Saudi Arabia’s Public Investment Fund (PIF), currently valued at $925 billion. "We aim to catch up to Saudi Arabia," Trump said. "The United States will soon have one of the largest sovereign wealth funds in the world." He outlined plans to channel investments into advanced manufacturing hubs, medical research, and defense capabilities, drawing inspiration from Saudi Arabia’s extensive use of its sovereign wealth fund for various projects.

Treasury Secretary Besant confirmed plans to establish the fund within the next 12 months, calling it "a strategically critical issue." Commerce Secretary Lutnick emphasized the fund’s potential to create value for Americans, describing it as a necessary bridge between government and private-sector initiatives.

However, questions remain regarding the funding source. Trump hinted at using tariffs imposed on foreign imports as a potential revenue stream but provided no concrete details during the signing ceremony. Bloomberg reported that officials close to Trump are exploring the conversion of the U.S. International Development Finance Corporation (IDFC) into a sovereign wealth fund.

Challenges to Implementation

Despite its ambitious goals, the plan faces significant hurdles. The United States is grappling with chronic budget deficits, raising concerns about the feasibility of financing the fund. The Hill, a U.S.-based political news outlet, criticized the proposal as "unrealistic," arguing that it relies on speculative future surpluses.

The sovereign wealth fund’s potential to bypass traditional budgetary approval processes also presents political challenges. The New York Times highlighted skepticism among lawmakers, who may see the fund as a way to sidestep Congressional authority over federal spending.

Geopolitical Implications: TikTok and Rare Earth Elements

The fund's establishment could also serve as a geopolitical tool. During the signing event, Trump emphasized his desire to link U.S. financial aid to Ukraine with access to the country’s rare earth reserves. "We’ve provided billions in support to Ukraine," he said. "In return, I want rare earth elements as collateral."

Rare earth elements are critical for advanced technologies, including defense systems and renewable energy solutions. Republican Senator Lindsey Graham estimated last November that Ukraine’s rare earth deposits could be worth between $2 trillion and $7 trillion.

Trump’s vision for the sovereign wealth fund underscores a broader strategy to consolidate U.S. economic and strategic power. If the plan materializes, it could reshape not only America’s domestic economy but also its global standing. However, the success of this unprecedented initiative will depend on overcoming political resistance, securing reliable funding, and effectively navigating the challenges of global markets.

By tying investments to key industries like advanced manufacturing, medical research, and defense, the U.S. could position itself as a leader in innovation and economic strength. Additionally, leveraging the fund to address the TikTok issue could set a precedent for how governments handle foreign-owned technology firms amid rising security concerns. Whether the plan will come to fruition remains uncertain, but its implications for global markets and U.S. policy are undeniable.

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