- Donald Trump presented his economic vision during a speech in New York
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Donald Trump unveiled a radical new plan Thursday to use tariff money to fund a sovereign wealth fund that will invest in roads, airports and defense technology.
It’s the kind of “build a wall” idea the former president is so fond of, as he searches for a populist proposal that can enthuse voters.
Wealth funds are generally set up by governments flush with excess cash generated by oil or gas discoveries. And Saudi Arabia, the United Arab Emirates and Kuwait have some of the most powerful examples.
But the idea will immediately face skepticism from economists, raising questions about whether Americans trust politicians to invest billions of dollars on their behalf and whether this is even constitutionally possible.
“Why don’t we have an endowment fund?” Trump asked his audience at the Economic Club of New York. “Other countries have endowments.
Donald Trump has unveiled a radical new plan to use money from tariffs to finance a sovereign wealth fund that can invest in roads, airports and defense technology
‘We have nothing. We have nothing.
“We are going to set up a sovereign wealth fund.”
The US has been running deficits for years, causing the national debt to continue to rise and leaving no money to put into an endowment fund.
The idea of government managing investments runs counter to the market-driven approach, which favors private markets over a federally controlled investment vehicle.
Trump took a radical step on Thursday by turning that orthodoxy on its head and tying the idea to another policy of his: he imposed 10 percent tariffs and stiffer penalties on goods from China.
“We will invest enormous amounts of money … that will come in through tariffs and other intelligent things, and we will have the largest sovereign wealth fund of all,” he said, “which will be used to do things that will be great for our country, including investing, investing wisely, and making it bigger, stronger, and better than any place on Earth.”
He added that the fund will be used for a variety of purposes, from transportation to defense.
“We will build extraordinary national development projects and everything from highways to airports and from transportation to infrastructure… everything of the future,” he said.
“We can invest in state-of-the-art manufacturing centers, advanced defense capabilities, groundbreaking medical research and save billions of dollars in disease prevention.”
Most wealth funds invest cash flows from oil, gas or minerals. But Trump plans to use revenue from new tariffs on imports
Republican presidential candidate and former U.S. President Donald Trump shakes hands with Sullivan & Cromwell Senior Chairman H. Rodgin Cohen at the Economic Club of New York
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And he said it would generate a “huge profit” that would help pay down the government debt.
The US already has a number of state-run endowment funds. The largest is the Alaska Permanent Fund, which uses revenues from oil and mineral resources.
But economists reacted negatively to Trump’s big idea, with critics warning of the potential for corruption.
“‘Sovereign wealth fund’ sounds cool, but this is how it will go,” posted Brendan Duke, a senior director of economic policy at American Progress and a Biden White House alumnus. “Trump is charging Americans what is essentially a national sales tax.
He will hand the money over to a friend if [billionaire businessman] Jeffrey Yass will manage it.
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Trump also promised in his speech to cut tax rates for companies that manufacture domestically and to establish “low-tax zones” on federal lands where construction companies would be encouraged to build homes.
And he announced plans for a government efficiency commission led by billionaire supporter Elon Musk, if he wins in November.