US President Donald Trump signed an executive order aimed at creating a government-owned investment fund on Monday. This fund could potentially generate profits from TikTok if
Trump successfully finds an American buyer for the app.
Initially, Trump had set a deadline for TikTok to secure a U.S. partner or buyer by early April. However, he now seeks for the U.S. to take a 50% stake in TikTok, which is owned by the Chinese company ByteDance.
“We might put that in the sovereign wealth fund, whatever we make or we do a partnership with very wealthy people, a lot of options,” Trump explained. “But we could put that as an example in the fund. We have a lot of other things that we could put in the fund.”
Sovereign Wealth Funds and U.S. Investment Strategy
Sovereign wealth funds typically invest in assets like stocks, bonds, and real estate. These funds are often funded by a country’s surplus, which, in the case of the U.S., is currently unavailable. Nevertheless, Trump suggested that the U.S. could eventually surpass Saudi Arabia’s sovereign wealth fund in size.
Globally, there are over 90 sovereign wealth funds, managing more than $8 trillion in assets. Additionally, the U.S. has more than 20 such funds at the state level, mainly funded by oil, gas, and mineral revenues. These funds usually support state programs such as education.
U.S. Sovereign Wealth Fund Plan
To move forward with the creation of the fund, Trump appointed Treasury Secretary Scott Bessent and Howard Lutnick, his pick for commerce secretary, to lead the charge. The executive order requires them to present a plan for the fund, including investment strategies and governance recommendations, within 90 days.
Bessent has expressed the goal of having the fund operational within a year. Meanwhile, Lutnick suggested that the fund could also be used for investments in vaccine manufacturers, further expanding its potential scope.
TikTok’s U.S. Future and Legal Battles
TikTok faced the possibility of a ban in the U.S. under a law passed in April, which required ByteDance to divest its stake in TikTok. However, Biden’s Justice Department recently paused enforcement of the law for 75 days, allowing more time for TikTok to negotiate a deal.
Meanwhile, several investors, including billionaire Frank McCourt and former Treasury Secretary Steven Mnuchin, have shown interest in purchasing TikTok’s U.S. operations. Additionally, Trump mentioned that Microsoft is also exploring the opportunity.
In another development, Perplexity AI, a San Francisco-based startup, proposed a deal to ByteDance. The proposal would allow the U.S. government to take a 50% stake in a new entity that would combine TikTok’s U.S. platform with Perplexity’s business. If successful, the deal could lead to an initial public offering (IPO) valued at $300 billion, potentially benefiting the U.S. government financially.
