- Donald Trump outlined his economic vision during a speech in New York
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Donald Trump on Thursday unveiled a radical new plan to use money from tariffs to fund a sovereign wealth fund to invest in roads, airports and defense technology.
It’s the kind of “build the wall” idea the former president has been fond of as he searches for a populist proposal that can excite voters.
Wealth funds are typically created by governments that are sitting on surplus money generated by oil or gas discoveries. Saudi Arabia, the United Arab Emirates and Kuwait have some of the most prominent examples.
But the idea will face immediate skepticism from economists amid questions about whether Americans would trust politicians investing billions of dollars on their behalf and whether it is even constitutionally possible.
“Why don’t we have a wealth fund?” Trump asked his audience at the Economic Club of New York. “Other countries have wealth funds.”
Donald Trump unveiled a radical new plan to use money from tariffs to fund a sovereign wealth fund that will invest in roads, airports and defense technology
‘We have nothing. We have nothing.
“We are going to have a sovereign wealth fund.”
The United States has been running deficits for years, meaning the debt has continued to grow and there is no extra cash to put into a wealth fund.
The idea of government management of investments also contradicts the market-driven approach, which prefers to use private markets rather than a federally controlled investment vehicle.
Trump set a radical tone Thursday, upending that orthodoxy and tying the idea to another of his policies: imposing 10 percent tariffs on imports and higher penalties on goods from China.
“We will invest enormous amounts of money … that will be raised through tariffs and other smart things, and we will have the largest sovereign wealth fund of all,” he said, “that will be used to do things that will be great for our country, including investing and investing wisely and building it bigger, stronger and better than any other place on Earth.”
The fund, he added, will be used for everything from transportation to defense.
“We will build extraordinary national development projects and everything from highways to airports to transportation, infrastructure… everything for the future,” he said.
“We will be able to invest in cutting-edge technology, manufacturing facilities, advanced defense capabilities, cutting-edge medical research, and help save billions of dollars by preventing disease in the first place.”
Most hedge funds invest windfalls from oil, gas or minerals. But Trump plans to use the revenue from new import tariffs
Republican presidential candidate and former US President Donald Trump shakes hands with Sullivan & Cromwell Chairman H. Rodgin Cohen at the Economic Club of New York
And he said it would generate a “huge profit” that would help pay off the national debt.
There are already several state-run wealth funds in the United States. The largest is the Alaska Permanent Fund, which uses revenues from oil and mineral resources.
But Trump’s big idea received little attention from economists, and critics warned of the potential for corruption.
“A ‘sovereign wealth fund’ sounds nice, but here’s how it will work,” posted Brendan Duke, senior director of economic policy at American Progress and a Biden alumnus in the White House. “Trump charges Americans what is effectively a national sales tax.
‘He will hand the money over to a crony like (billionaire businessman) Jeffrey Yass to manage.
“Who will invest money in Trump properties and bail out Elon for Twitter?”
Trump also used his speech to promise to cut tax rates for companies that manufacture in the country and establish “low-tax” zones on federal lands where construction companies would be encouraged to build housing.
And he announced plans for a government efficiency commission headed by his billionaire backer Elon Musk if he wins in November.