The US Supreme Court lawsuit challenging Donald Trump’s tariff war and the recent budget fight on Capitol Hill might have dragged down – if not sunk – one of Washington’s proposed tools to spearhead its strategic competition with China.
Ten months after Trump’s executive order authorising the creation of the nation’s first-ever sovereign wealth fund (SWF), there are still few clues about how it can be funded, structured and managed, leaving a giant question mark on whether it could run into a dead end.
However, as the situation unfolds, Trump – intentionally or not – may already be creating a de facto SWF.
In a proposal published on February 3, President Trump outlined key missions of the fund, including promoting fiscal sustainability, reducing tax burdens, establishing economic security and promoting US economic and strategic leadership.
Although China is not mentioned in Trump’s official rationale for the fund, analysts say Beijing has had some success in leveraging a sovereign wealth fund in its industrial policy – along with others, including Norway and Singapore – which is likely driving the administration’s interest in this strategy.
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The breadth of the proposed US fund’s remit and the stability of revenues that would sustain it have also been questioned.
