Trump Wants To Create A Sovereign Wealth Fund To Buy TikTok

US President Donald Trump recently signed an executive order for the creation of a sovereign wealth fund within the next year. While this sovereign wealth fund could be used for various investments, Trump floated one potential use for the immediate future which is to purchase TikTok, the popular social media platform.

Buying TikTok

TikTok has been under scrutiny by the US government over national security concerns. Previously, TikTok was given an ultimatum which was to sell itself to a US-owned company or face being shut down. Trump delayed the ban by 75 days when he took office last month. Trump has put forward the possibility that US companies such as Microsoft or Oracle buy TikTok. He has also expressed his openness to Elon Musk acquiring the app.

When asked how the US government plans to finance this fund, Trump stated that it could be funded with “tariffs and other intelligent things.” This fund could finance projects within the US, but for now, Trump considers one potential use for it is to buy TikTok.

Sovereign wealth funds aren’t new. For those unfamiliar with the concept, the government owns these funds as investment vehicles. They typically finance projects that can benefit the nation. There are many countries that already have their own sovereign wealth funds. This includes countries such as Norway, Saudi Arabia, and the UAE, as well as several nations in Asia.

Most countries rely on a budget surplus to finance these funds. You can think of it as having extra money at the end of the month. Once you pay all your bills, you can put the extra money into a high-interest savings account or invest it in the stock market. However, the US continues to operate on a deficit, which raises some questions.

Held hostage

TikTok currently finds itself in a hostage-like position. If its parent company, ByteDance, refuses to sell TikTok, it could shut down in the US. This could potentially end up costing ByteDance billions. However, selling itself to a US company or to the US government could complicate the political scene even further.

The Chinese government has shown no intention of letting TikTok go. This is because China deems TikTok’s proprietary algorithms as a “core” piece of Chinese technology. Due to this designation, it greatly restricts the export, let alone sale, of the technology to foreign nations. This has become less about what ByteDance wants and more about what China will allow.

The creation of a US sovereign wealth fund is still in its early stages, so it is unclear if it could end up being used to buy TikTok. Either way, this political drama is far from over. It will be interesting to see what will unfold in the next couple of months and if TikTok will find a way out of this geopolitical mess.