Part 6/10:
Nevertheless, leveraging assets to fund a sovereign wealth fund poses risks. Borrowing incurs interest expenses, which could eclipse potential market returns, especially considering the volatile nature of stock market investments. As the U.S. borrows at an interest rate of around 4.5%, successful long-term stock market returns remain uncertain, further complicating this financial strategy.
In addition, Trump has indicated potential reliance on tariffs to finance the fund. While tariffs could theoretically generate revenue, their practicality and effectiveness in reality are questionable, especially in the face of bureaucratic challenges and previously suspended tariffs during Trump's first term.