Trump Wants A Sovereign Wealth Fund. How Would That Work? | Global News Avenue

If the United States builds a sovereign wealth fund with President Donald Trump’s executive order this week, it would be unusual among those already established in other countries.

President Donald Trump ordered his administration to develop plans on Monday Sovereign wealth fund. Such funds are Common around the world– Although the largest countries are run by governments that sell rich resources and operate large budget surpluses, namely Norway and Saudi Arabia. By comparison, the United States operates in terms of spending deficits and has $36 trillion in Treasury bonds.

Finance Secretary Scott Bessent said at an Oval Office ceremony on Monday that the fund will be established within 12 months.

“I think in a short time, we will have one of the biggest funds,” Trump said in a signing of the executive order.

According to the Sovereign Wealth Institute, the world’s largest fund is the Norwegian government pension fund, worth $1.7 trillion.

Where does money come from?

Details about Trump’s proposed fund are unclear, including where the money comes from. During the presidential campaign, Trump suggested that a fund could be built by “geting money through tariffs and other clever things.”

Bessent said the fund would “profit one party on the U.S. balance sheet” without specifying what he refers to or how to make a profit. Government assets include trillions of cash, student loans owed to that fund, buildings, equipment and land, including mineral rights.

How to invest?

Other major issues include what the fund will invest in and how it is used.

At the signing ceremony, Trump suggested that the fund could be used to invest in Tiktok, a Chinese-owned social media platform. A law passed a law in December that ordered the site to be closed in the United States unless its owner (Bytedance) sold it. On Inauguration Day, Trump signs executive order Delay ban order Until April.

Trump’s nominee Howard Lutnick, who heads the Commerce Department, suggested that the government could use the fund to invest in vaccine manufacturers.

“If we were to buy 2 billion covid vaccines, maybe we should have some warrants and some equity in these companies,” Lutnik said.

The fund will be used to “build extraordinary national development projects and from highways to airports to transportation infrastructure” as well as “standard-of-the-art manufacturing, hubs, advanced defense capabilities” and “cutting medical research”, Trump in September said in a speech at the New York Economic Club.

Although the U.S. government does not have sovereign wealth funds, the state of Alaska is indeed funded by revenue taxing oil and other natural resources. Every year, the state sends checks to Alaska residents. Last year, everyone got $1,702.

Funds bring risks of corruption

On the other hand, given the huge potential of corruption and conflict of interest, establishing sovereign wealth funds may also pose some risks, as some foreign sovereign wealth funds have occurred.

For example, between 2009 and 2015, senior officials associated with Malaysia’s sovereign wealth funds misappropriated $4.5 billion, including sending $1 billion to the then-Prime Minister’s personal bank account.

Which safeguards the fund will defend against corruption and conflicts of interest is also unclear. Trump’s orders gave Lutnick and Bessent, both billionaires who made 90 days of fate on Wall Street to provide details on the program.