Inflation driven by tariffs is among the biggest market risks in 2025, Nicolai Tangen, head of the world’s biggest sovereign wealth fund, said Tuesday.
“I don’t think I should give any advice to the US, but if you look at the risk to financial markets, I think inflation is for sure one, all driven by tariffs,” the CEO of Norges Bank Investment Management told CNBC at the World Economic Forum in Davos.
“Many of the suggestions now coming out of the US are potentially inflationary. They could cause more inflation. There could be less labor supply, there could be more tariffs — all of these things are driving inflation, and so it’s not a given that inflation will come down,” he said.
Political leaders around the world are nervously waiting to see what trade policies newly-inaugurated US President Donald Trump will deliver, following months of strong rhetoric.
Trump said Monday he was considering implementing 25% tariffs on Mexico and Canadatwo of the US’s biggest trading partners, as soon as early February. He has previously threatened 50%-60% tariffs on Chinese goods, and duties on European Union imports unless the bloc ups its US oil and gas purchases.
Norges Bank’s Tangen also flagged chief risks to markets including higher for longer interest rates, high levels of government debt and geopolitical tensions. As his top risk, he cited concentration in US equities among large cap tech firms, which he said had “never been bigger.”
However, he said that “purely financially,” for a lot of US companies, Trump’s arrival was going to be “very positive.”
“A lot of these policies we would not necessarily agree with, but if we look at it just from a financial point of view, as a financial investor, it’s generally very exciting. You know, we have more than half the assets invested in America And when we talk to American CEOs, and we talk to a lot of them, we really see this animal spirit coming back.”
Tangen leads Norway’s mammoth sovereign wealth fund, which posted first-half profit of 1.48 trillion kroner ($138 billion) last year, primarily driven by investments in technology stocks.
