Trump's $100K H-1B fee could hit startups, push jobs overseas and threaten U.S. tech talent pipeline.
In a controversial policy move, President Donald Trump has implemented a $100,000 fee for new H-1B visa applications, a significant increase over the program's previous administrative costs of $1,700 to $4,500. The new fee, which went into effect on September 21, 2025, aims to reduce reliance on foreign labor by making it more expensive for U.S. employers to hire highly skilled workers from abroad. However, this change has sparked widespread concern in the tech industry, with many warning of its potentially harmful effects on innovation and competition.
A Game-Changer for H-1B Visas
The H-1B visa program, established in 1990, allows U.S. employers to hire foreign professionals in highly specialized fields such as technology, engineering, and medicine. It has long been a vital pipeline for companies seeking top-tier global talent, but this fee hike may dramatically alter its usage. The $100,000 fee applies only to new applications and not to renewals, which has somewhat eased initial concerns. However, tech executives and industry leaders remain alarmed about the long-term implications for their ability to hire skilled workers.
This fee increase coincides with a revision of the prevailing wage levels by the Department of Labor and new rules from the Department of Homeland Security prioritizing high-skilled, high-paid workers in the H-1B lottery system. These changes are meant to counteract what the Trump administration claims are abuses of the program, including the hiring of lower-skilled workers at cheaper wages to replace American employees.
Widespread Concerns in the Tech Sector
Following the announcement, panic spread through the tech industry, with companies like Microsoft, Amazon, and Google reportedly arranging last-minute flights for their overseas H-1B visa holders to return to the U.S. before the fee took effect. While the White House later clarified that the new fee would not apply to existing H-1B holders, the initial uncertainty underscored the industry's reliance on this visa program.
Critics argue the fee hike could disproportionately harm startups and smaller tech companies, which may lack the financial resources of industry giants. Garry Tan, president and CEO of Y Combinator, noted that the $100,000 fee "won’t bother big tech" but will "kneecap startups." He added that alternative measures could address program abuses without stifling innovation or entrenching larger firms.
Potential Impact on America’s Competitive Edge
Some industry leaders fear that this policy change could weaken the U.S.'s ability to remain a global leader in fields like artificial intelligence (AI) and biotechnology. "I think this is going to mean that we’re fighting the AI war against China with one hand tied behind our back", said Adam Kovacevich, founder and CEO of Chamber of Progress, a tech policy group. He warned that limiting access to top international talent could hinder innovation at a time when foreign-born researchers play a critical role in advancing AI and other technologies.
The U.S. tech industry is already facing a talent shortage, and the H-1B program has been a key resource for filling high-demand roles. Economists generally agree that hiring H-1B workers benefits companies in the long term by creating jobs and driving growth. However, with fees now exceeding most entry-level salaries, many companies may reconsider their hiring practices or shift operations offshore.
Outsourcing on the Rise?
Another potential consequence of the fee hike is the acceleration of offshoring trends. Some analysts predict that companies may expand overseas operations in countries like India, where labor costs remain competitive. Already, an estimated 1.9 million people in India work for foreign companies, with that number projected to grow by hundreds of thousands in the coming years.
The policy may also deter multinational outsourcing firms, such as Tata Consultancy Services and Infosys, from hiring less-skilled workers. While this might encourage some American companies to hire domestically, the shortage of highly skilled talent in the U.S. remains a significant challenge.
A Program Under Scrutiny
The Trump administration has justified the fee increase by arguing that the H-1B program has deviated from its original goal of supplementing the U.S. workforce with highly skilled foreign workers. The administration cited unemployment rates of 7.5 percent for recent computer engineering graduates and 6.1 percent for computer science graduates as evidence that the program has created disincentives for Americans to pursue STEM careers.
Moreover, the administration has pointed to instances in which major companies laid off American workers while hiring H-1B employees. For example, Microsoft reportedly received approval to hire 5,189 H-1B workers this year while laying off 16,000 U.S. employees. Similarly, Intel laid off 2,400 workers in Oregon after securing approval for 1,698 H-1B hires.
Industry Braces for Change
With the new fee set to take effect in the 2026 H-1B lottery cycle, experts predict a steep decline in applications. JP Morgan economists have forecasted a reduction of 5,500 work authorizations per month, and a New York Times analysis found that a third of last year’s H-1B applications were for positions paying $100,000 or less. These jobs are unlikely to justify the new application fee, potentially shifting hiring practices across the industry.
As the U.S. tech sector grapples with these changes, the broader implications for innovation, competitiveness, and global talent acquisition remain uncertain. However, one thing is clear: this policy is poised to reshape the landscape of the H-1B visa program and, with it, the future of the American tech industry.
