What Is a Sovereign Wealth Fund, and How Could It Buy TikTok: Donald Trump's Big Bet

A newly signed executive order by President Donald Trump has sparked significant debate over the creation of a United States sovereign wealth fund, a move that could transform domestic and global financial landscapes.

According to Reuters, President Trump has instructed the US Treasury and Commerce Departments to 'stand this thing up within the next 12 months', suggesting the fund might even be used to purchase the popular social media platform TikTok.

TikTok, reportedly used by 170 million Americans, found itself at the centre of political tension earlier this year. Prior to a new law coming into force on 19 January, its Chinese owner ByteDance was ordered either to sell the app or face an outright ban over national security concerns.

President Trump, who took office on 20 January, issued an executive order granting a 75-day delay to that law's enforcement but has signalled the app's ultimate fate could be decided in the coming weeks. Per reports from The Globe and Mail, he confirmed he was in talks with 'multiple people' about TikTok's purchase and expected to make a final decision imminently.

Trump's Groundbreaking Executive Order

Trump's latest directive marks one of the first moves by an American president to establish a national sovereign wealth fund (SWF). He has long touted the idea, previously stating that such a vehicle could help finance 'great national endeavours', including infrastructure renewal, manufacturing and medical research.

Speaking from the White House, he declared: 'We're going to monetise the asset side of the US balance sheet for the American people. There'll be a combination of liquid assets, assets that we have in this country as we work to bring them out.'

A sovereign wealth fund is a state-run investment arm that can hold assets including equities, bonds, real estate and infrastructure projects, aiming to advance economic interests. Such funds often derive capital from budget surpluses, commodity exports or other government revenue streams, and use those resources to diversify a nation's wealth or stabilise revenue during periods of market volatility.

How Sovereign Wealth Funds Work

There are more than 90 sovereign wealth funds worldwide, collectively managing assets exceeding £6.6 trillion ($8 trillion). According to Newsweek, some of the most notable examples include Norway's Government Pension Fund Global, Abu Dhabi Investment Authority and China's China Investment Corporation.

Although the United States typically runs at a deficit rather than a surplus, President Trump has suggested that 'tariffs and other intelligent things' could furnish the new fund with substantial capital. Critics, however, caution that any large-scale sale of national assets or new revenue-raising mechanisms would likely require congressional approval—no small hurdle in today's politically polarised climate.

Still, the President's remarks on using this prospective fund to acquire TikTok underscore the potential strategic might an SWF might wield. Citing national security worries, Trump has portrayed Chinese control of the platform as a threat, though ByteDance denies such allegations. With the 75-day deferral in place, the administration is currently assessing several prospective buyers—adding an air of uncertainty for the app's vast user base.

The Road Ahead for America's Sovereign Wealth Fund

As the US moves closer to unveiling the details of its own sovereign wealth fund, analysts are examining whether it can mirror the success of similar funds in Europe, Asia and the Middle East.

In many countries, these investment vehicles help to stabilise economies dependent on volatile commodity prices, create savings for future generations and fund transformative projects. By contrast, in the American setting, political wrangling and fiscal shortfalls could complicate the fund's launch.

Whether the new SWF ultimately purchases TikTok or channels resources into other initiatives, President Trump's decision may well be a historic turning point in how the federal government manages and leverages national assets.

As specifics of the fund's composition, governance and financing become clear, global markets will be watching closely. For now, though, TikTok remains in limbo, awaiting a verdict that could fundamentally alter its ownership and possibly reshape how social media firms operate under the watchful eye of a sovereign investor.