World’s largest sovereign wealth fund warns markets at risk of tariff-induced inflation

Tariff-driven inflation is one of the biggest market risks in 2025, Nicolai Tangen, head of the world’s largest sovereign wealth fund, said on Tuesday.

“I don’t think I should give any advice to the US, but if you look at the risk to the financial markets, I think inflation is for sure and it’s all driven by tariffs,” Norges Bank Investment Management CEO told CNBC . World Economic Forum in Davos.

“Many of the proposals now coming out of the US are potentially inflationary. They can cause even more inflation. There may be less labor supply, there may be more tariffs — all this contributes to inflation, and therefore inflation will not go away,” he said.

Political leaders around the world are nervously waiting to see what is the trade policy Newly inaugurated US President Donald Trump will speak after months of tough rhetoric.

Trump said on Monday that he did is considering 25% tariffs on Mexico and Canadatwo of the largest trading partners of the USA, already in early February. He had it before at risk of 50-60% tariffs on Chinese goods, and duties on imports into the European Union unless the bloc increases purchases of US oil and gas.

Norges Bank Tangen also highlighted key risks for markets, including rising interest rates, high levels of government debt and geopolitical tensions. He cited the concentration in US stocks of large technology companies as his top risk, which he said has “never been greater”.

However, he said that “purely financially” for many American companies, the arrival of Trump will be “very positive”.

“We don’t necessarily agree with a lot of these policies, but if we look at it just from a financial perspective, as a financial investor, it’s generally very interesting. You know, we have more than half of our assets invested in America .. And when we talk to American CEOs, and we talk to a lot of them, we really see that animal spirit coming back.”

Tangen heads Norway’s giant sovereign wealth fund, which published its first half profit 1.48 trillion kroner ($138 billion) last year, mainly through investments in technology stocks.