On February 3, 2025, President Donald Trump signed Executive Order 14196, directing the U.S. Treasury and Commerce Departments to develop a plan for establishing a United States Sovereign Wealth Fund (SWF) within 90 days. The proposed fund aims to promote fiscal sustainability, reduce tax burdens on American families and small businesses, and enhance the nation's economic and strategic leadership internationally.

Sovereign wealth funds are state-owned investment entities designed to manage national assets for the benefit of future generations. Globally, these funds manage over $8 trillion in assets, with countries like Norway, China, and Saudi Arabia utilizing them to diversify their economies and invest in global assets. In the United States, several states, including Alaska, Texas, and New Mexico, operate their own SWFs funded by natural resource revenues, which help finance various state priorities such as education and tax relief.

President Trump's executive order mandates that the Treasury and Commerce Secretaries, in coordination with the Assistant to the President for Economic Policy, submit a comprehensive plan detailing funding mechanisms, investment strategies, fund structure, and governance models. The plan is also expected to include an evaluation of the legal considerations for establishing and managing such a fund, including any need for legislation.

One proposed funding mechanism for the SWF is the utilization of revenues from tariffs on U.S. imports. President Trump suggested that these revenues could serve as the fund's foundation. Treasury Secretary Scott Bessent indicated that the goal is to monetize U.S. government-owned assets for public benefit, involving a mix of liquid and other domestic assets. The federal government directly holds $5.7 trillion in assets, and when including natural resource reserves, the total asset value is far larger.

As of May 8, 2025, the White House confirmed that plans for the SWF have been developed, but no final decisions have been made. The administration has proposed that the SWF could acquire stakes in private companies, such as the social media platform TikTok, should an American buyer be found.

The establishment of a federal SWF presents several challenges and considerations. Unlike many countries with SWFs funded by budget surpluses or natural resource revenues, the U.S. operates with a budget deficit projected at $1.9 trillion for the current fiscal year. Identifying sustainable funding sources remains a significant challenge. Additionally, establishing a governance model that ensures transparency and minimizes political influence is crucial. Critics express concerns about potential inefficiencies and cronyism associated with government-managed investment funds. The creation of a federal SWF would likely require congressional approval, presenting potential political hurdles given the divided opinions on government involvement in investment decisions.

If successfully implemented, a U.S. SWF could provide a new revenue stream to support federal programs and potentially reduce the national debt. The establishment of a significant government-owned investment entity could impact financial markets, depending on the fund's size and investment strategies. The U.S. joining the ranks of countries with SWFs may influence global economic dynamics and trade relationships.

The development of the U.S. Sovereign Wealth Fund is in its early stages, with the administration working to address the various challenges and considerations associated with its establishment. The coming months will be critical in determining the feasibility and potential impact of this initiative on the nation's economic future.