Trump's sovereign wealth fund likely to be aimed at China, but how will he finance it?

Questions raised over funding, but Trump hints it could be used to buy stake in TikTok

- Bhagyashree Garekar

WASHINGTON - The sovereign wealth fund (SWF) that US President Donald Trump wants to create will likely be weaponised in America's escalating geostrategic rivalry with China.

It is still to be determined how large America's first national SWF will be and how it would be funded, but Mr Trump said it could monetise the US$5.7 trillion (S$7.71 trillion) in assets that the US government currently holds. This could potentially make it the world's largest SWF.

While setting a deadline of 90 days for the Treasury and Commerce departments to deliver a plan to create the SWF - typically a vehicle for channelling national surpluses to create wealth - Mr Trump offered one hint at its use.

The SWF could be used to buy out the stake owned by Chinese company ByteDance in TikTok.

"We're going to be doing something, perhaps with TikTok," he said after signing an executive order for the creation of the SWF on Feb 3.

This was not the first time that Mr Trump has said he would like the US government to hold a 50 per cent stake in the wildly popular short video app, which was facing a ban on national security grounds because of its Chinese parentage.

Mr Trump has effectively given the app a lifeline until early April.

Potentially, the US could also dip into the SWF to extend its influence over the Panama Canal and Greenland, which Mr Trump has highlighted in recent weeks as areas where the US must not let China have the upper hand.

Leveraging national assets to promote "US economic and strategic leadership internationally" was one of the stated aims for the fund, which is expected to be operational in a year.

The other listed objectives for the SWF in Mr Trump's executive order are to promote fiscal sustainability, lessen the burden of taxes on American families and small businesses, and establish economic security for future generations.