US president Donald Trump on Monday signed an executive order initiating the formation of a sovereign wealth fund for the country that he said could buy TikTok.

The stages of how such a fund could be formed, or whether it will be created, remain unknown, but the order gave the heads of the Treasury and Commerce departments 90 days to submit a plan for doing so.

The document said the plan should include recommendations on “funding mechanisms, investment strategies, fund structure, and a governance model”.

Trump said the US may somehow buy Chinese-owned social media app TikTok with the fund.

Future of TikTok

“We’re going to be doing something, perhaps with TikTok, and perhaps not,” he said.

“If we make the right deal, we’ll do it. Otherwise, we won’t…we might put that in the sovereign wealth fund.”

TikTok faces a ban in the US under a bipartisan law passed last year, but Trump ordered a 75-day extension on the ban to continue negotiations about a change of ownership for the app, which has about 170 million users in the US.

Governments in many countries, particularly in the Middle East and Asia, use such funds for direct investments in the private sector.

Countries with significant sovereign wealth funds include China, Singapore, New Zealand, Norway and Saudi Arabia.

MGX, a fund backed by the United Arab Emirates, is a key partner in an AI infrastructure plan called Stargate announced by the US administration last month.

There are more than 90 such funds across the world managing $8 trillion (£6.4tn) in assets, according to the International Forum of Sovereign Wealth Funds, with the largest being the Government Pension Fund of Norway, with $1.7tn under management.

‘Monetising assets’

Such funds are generally funded by a country’s budget surplus, but the US operates at a deficit.

The formation of such a fund is likely to require approval by Congress.

Administration staff secretary Will Scharf said the order “will hopefully result in the creation of an American sovereign wealth fund”.

Treasury secretary Scott Bessent said the fund would “monetise the asset side of the US balance sheet for the American people” and would be running in 12 months.

He said the administration would study best practices from other countries.

The Biden administration was also considering forming such a fund, according to reports by The New York Times and the Financial Times.