U.S. Weighs Tariff-Funded Sovereign Wealth Fund

The U.S. government is considering a new sovereign wealth fund, with funding potentially coming from tariffs imposed on foreign countries, according to insider sources. This fund, currently in the early planning stages, could be led by Michael Grimes, a former tech investment banker at Morgan Stanley who recently joined the U.S. Department of Commerce in a senior role.

The fund's capital is expected to come from tariffs and other reasonable income sources, as previously stated by President Donald Trump. The proposed "External Revenue Service" may be tasked with managing these tariff revenues. The fund's exact purpose and scope remain unclear, but it is expected to play a significant role in the U.S. economy and foreign policy.

The idea of using seized assets to fund defense efforts is not new. The U.S. has been pressuring Europe to use Russian assets to support Ukraine's defense. However, the specifics of how this new fund will operate and the extent to which it will be used to fund defense efforts remain to be seen.

Trump has long been an advocate of tariffs, believing that they will encourage foreign companies to build their operations in the U.S. to avoid paying them. In his 2025 address to a joint session of Congress, he reiterated this stance, stating that companies would come to the U.S. because they would not have to pay tariffs if they built their operations there.

While the U.S. sovereign wealth fund is a new development, other countries have long used such funds to manage their financial resources. For example, Norway's $1.8 trillion oil fund has made investments in external hedge funds with long-short strategies, demonstrating the potential for such funds to generate significant returns.

The impact of tariffs on the U.S. economy has been a contentious issue. When the Trump administration's long-promised tariffs took effect, stock markets initially fell, reflecting concerns about the potential impact on trade and economic growth. However, the long-term effects of these tariffs remain to be seen, and the U.S. sovereign wealth fund may play a role in mitigating any negative impacts.