Trump Orders The Creation Of U.S. Sovereign Wealth Fund, Signals Interest In TikTok

On Monday President Trump signed an executive order directing the Commerce and Treasury departments to create a US Sovereign Wealth Fund, which might be used to purchase a stake in TikTok. 

A sovereign wealth fund (SWF) is a state-owned investment portfolio that governments use to purchase various financial assets such as stocks, bonds, real estate, precious metals, etc. SWFs have become increasingly common over the last few decades – nations such as China, Norway, Singapore, Saudi Arabia, and the United Arab Emirates have trillions of dollars in assets, and several American states including Alaska, Texas, and New Mexico have SWFs worth tens of billions of dollars.

It’s not quite clear where the money would come from for the U.S. SWF because “the U.S. has significant budget and trade deficits” and not a budget surplus, according to The Wall Street Journal. 

SWFs are often financed by budget surpluses or profits generated by state-owned enterprises – after covering costs the government invests some taxpayer dollars to generate more revenue in the future via capital gains, pay for pension benefits, or promote certain policy goals like economic development or the control of “essential” resources.

Like, say, a massive social media company.

President Trump has expressed interest in taking a stake in the social media giant before  –  he entertained the idea during the first press conference of his new administration.

“TikTok is worthless if I don’t approve it,” Trump said, “If I do the deal it’s worth maybe $1 trillion … if I do the deal for the United States I think we should get half.”

TikTok has more than 170 million American users and is one of the most frequently visited websites in the world, but has come under considerable scrutiny as ‘Chinese spyware’ – the platform is currently owned by a Chinese company called ByteDance, and it has allegedly been used to spy on American citizens and domestic enemies of the CCP. 

“TikTok’s own conduct makes clear that it is beholden to the CCP and presents an unacceptable threat to U.S. national security,” FCC Commissioner Brendan Carr said in support of efforts to ban the app.

Last year Congress, with bipartisan support, passed a law that effectively banned TikTok in the US unless the company was sold to a different owner. The Supreme Court upheld that decision in January, shortly before Trump returned to the White House, concluding that the ban did not violate the First Amendment.

“There is no doubt that, for more than 170 million Americans, TikTok offers a distinctive and expansive outlet for expression, means of engagement, and source of community,” the court wrote. “But Congress has determined that divestiture is necessary to address its well-supported national security concerns regarding TikTok’s data collection practices and relationship with a foreign adversary.”

The ban went into effect on January 19th, and the app briefly went dark in the United States, but one of President Trump’s Day 1 executive orders gave ByteDance a 75-day extension to find a buyer.

Trump has been highly critical of TikTok in the past, and attempted to ban the app during his first term. However, his attitude towards the platform has warmed considerably since then – he currently has more than 15 million followers on TikTok and used the app during the election campaign to drive up his support among younger voters, who disproportionately use TikTok.

Previously the President has indicated that he was in talks with multiple potential buyers and that a decision would likely be made sometime in February. Other private investors have expressed interest in purchasing TikTok, including Shark Tank investor Kevin O’Leary, and major American tech companies like Oracle and Microsoft.

While TikTok is still accessible to current users, the app is not available on major American app stores. The exact details of a potential deal remain unclear, and the president’s efforts to save the platform have generated some pushback on Capitol Hill.