- Sovereign wealth funds are increasingly being used as geopolitical tools of economic warfare and alliance-building among both states and elites.
- The Trump administration is exploring the possibility of a US sovereign wealth fund, with details expected in May.
- Two key unanswered questions are how a US sovereign wealth fund would be capitalized, and how transparent it would be.
In February 2025, US President Donald Trump signed an executive order directing the Departments of Treasury and Commerce to develop a plan for a US sovereign wealth fund (SWF). That plan is expected in May. The executive order provided no operational guidance but signaled the administration’s intent to use the fund as a tool of economic leverage and global influence.
The proposal comes amid a broader shift in how governments around the world are using SWFs. These funds are no longer just financial vehicles tied to commodity exports, economic diversification, or fiscal surpluses. They are being redefined as instruments of diplomacy, industrial policy, and strategic influence in response to increasing geopolitical tensions, tariffs, sanctions, de-dollarization, and retaliatory trade actions. Just as the United States prepares to join the group of nations operating such funds, the function and scope of SWFs in global power politics are changing.
The Diplomatic Turn: SWFs as Strategic Tools of the State
Sovereign wealth funds have historically been established to stabilize national budgets during commodity booms and busts or to invest state surpluses abroad. Norway’s Government Pension Fund and Chile’s Stabilization Fund were designed with fiscal discipline and macroeconomic stabilization as primary goals. Nevertheless, such use cases are no longer the dominant model.
