Transcription
Last week, President Trump signed an executive order that would charge companies $100,000 dollars for each new H-1B visa application. The H1B is the main visa used for hiring skilled foreign workers in the United States. The announcement triggered a wave of panic among foreign workers, confusion amongst employers, and a flurry of clarifications from the White House.
Images were shared online of panics at airports as passengers tried to disembark airplanes that were ready to take off, fearing that if they left the country, they might not be allowed to return. Commerce Secretary Howard Lutnick added to the confusion - standing next to Trump at the signing, he told reporters that it was an annual charge, saying companies would need to decide whether a foreign worker was “valuable enough” to justify paying a hundred thousand dollars a year to the government, in addition to the worker’s salary.
Over the next 24 hours, the White House scrambled to correct the record. Karoline Leavitt issued a three-point clarification, stating that the fee was not annual — it is a one-time payment, that it applies only to new applications, not renewals and that current visa holders would not be charged to re-enter the country.
This announcement from President Trump comes with a certain irony. During his campaign in 2020, he praised the H-1B program calling it “a great thing” and “something I’ve always supported.” Less than a year ago he told a podcast – while he was campaigning- that “if you graduate from a college, you should get a green card with your diploma.” Now, he’s proposing a fee which would effectively end the H 1B visa category by making it prohibitive for most businesses to hire foreign workers in the United States.
While a lot of the news has been about the tech industry - the visas are widely used by the U.S. healthcare sector to recruit international medical graduates or foreign-trained doctors and other professionals trained abroad. Universities additionally rely on them to hire professors, researchers and postdocs. Estimates circulated online that the visa fee could raise $14 billion dollars a year in revenue - but these projections assumed that demand would remain unchanged and that the fee would apply to annual renewals — neither of which is true. The actual revenue is likely to be significantly lower as the new rule incentivizes companies to hire highly skilled workers at foreign based offices instead of bringing them into the United States.
The H-1B visa was created in 1990 as a way for U.S. employers to hire foreign workers in “specialty occupations” that require specific technical expertise. It quickly became the go-to visa for companies looking to fill roles in software engineering, data science, biotech, and other fields where the demand for workers exceeds the domestic supply. Each year, the U.S. government issues 85,000 new H-1B visas — 65,000 go to applicants with bachelor’s degrees and 20,000 go to those with U.S. graduate degrees. Demand is so high that the entire allotment gets claimed within 24 hours of the application window opening, so, the government then runs a lottery to decide who gets a visa. The lottery system is not the best approach as it means that a foreign graduate with really rare and important skills ends up having the same odds of getting a visa as someone with more common qualifications.
The H-1B visa lasts for three years and can be extended to six. After that, workers must either leave the country or transition to a green card. There is a per-country cap on the number of green cards allocated – so, no country can get more than 7% of the available green cards – this means that people from countries with high populations like China and India have really long wait times for green cards and the only real route into working in the United States is through the H-1B visa. Once they get a H-1B, these workers are tied to their employer – and if they lose their job, they have 60 days to find another or face deportation. Because of the cap on Green Cards, many Chinese and Indian workers find themselves stuck on temporary visas – while they try to build lives in the US – aware that losing their job could quickly lead to deportation. If they have children who were born abroad – those children lose the right to stay as soon as they become adults.
So, let’s look at which firms hire the most H-1B workers, whether the fee is legal, how this might affect the brain drain in emerging markets – and whether it will improve job prospects for American workers. People talk about the lead crisis in Flint, Michigan like it was a one-off event, but most tap water is contaminated in one way or another. If you're like me and just want boring, clean H2O, I recommend purifying your water with today's sponsor, Cove Pure. A lot of tap water contains microplastics forever chemicals and pharmaceutical residue or just doesn't taste as good as it could. Sure, you could use a Brida, but that's just a cheap carbon filter. Or you could waste money on bottled water, which half the time is just tap water wrapped in plastic. I'd rather use something that actually works. Cove Pure removes up to 99.9% of contaminants and sits right on your countertop. No installation is needed. You just fill it up and plug it in. I've used my Cove Pure for over a year and I've noticed a huge difference in how my water tastes. Cove Pure gives you instant hot or cold water and even lets you set a precise temperature. For green tea, boiling water ruins the flavor, but one press of a button gives me the perfect 185°ree water I need. Clean water is one of the best investments you can make. Head over to covepure.com/patrick right now or click the link below and you'll get $200 off while supplies last.
In recent years, the H-1B visa program has been most heavily used by tech firms. In 2022, Amazon was the top H-1B sponsor, followed by Tata Consultancy Services, Google, Microsoft, and Infosys. H-1B workers tend to be young, highly educated, and willing to relocate. They also tend to stay in America if they can. Many go on to become permanent residents, start companies, or take leadership roles in U.S. firms. Four of the seven most valuable public companies in America — Google, Microsoft, Tesla, and Nvidia — are led by former H-1B holders. So are the CEOs of the four most valuable private companies.
Obviously with the passing of the Genius Act – The United States is focusing more on technology like stablecoins, cryptocurrencies and other businesses which don’t really require the same level of education as was needed for things like chip design – so attracting scientists and engineers may be less important as the focus on this type of business grows. A background in Physics isn’t really needed to come up with something like Fartcoin.
The H-1B visa has been a cornerstone of America’s skilled immigration system. It’s not perfect — critics say that it’s vulnerable to abuse and can suppresses wages — but it has helped the U.S. maintain its edge in science, technology, and innovation. Highly skilled immigration has been key to Americas tech and scientific leadership over the years. More than 20% of American Nobel prizewinners were immigrants. This new fee puts that edge at risk.
Supporters of the H-1B program often cite a study claiming that each foreign worker hired on an H-1B visa leads to the creation of five additional jobs for Americans. The logic is that skilled workers boost productivity, help companies grow, and allow firms to expand their domestic operations. It’s worth noting that the five-jobs figure comes from a single study and isn’t universally accepted. Critics argue that the visa can suppress wages. Outsourcing firms, in particular, have been accused of using the program to bring in workers at below-market rates. A 2023 analysis found that 60% of H-1B jobs were paid below the median wage for the occupation. Now this could be explained by H-1B visas being held by typically younger workers. The Department of Labor requires employers to pay either the prevailing wage or the actual wage paid to similar U.S. workers — whichever is higher — but enforcement is patchy, and the fact that it is extremely difficult for H-1B workers to change jobs – possibly means that employers take advantage of them. The nature of the program is that it can both create jobs – when it brings in highly skilled workers that help US firms to innovate and grow – or it could suppress wages, depending on how it’s used.
There’s also disagreement about whether the U.S. has enough STEM graduates to meet demand. Some studies say yes. Others say no. What’s clear is that many STEM graduates in the U.S. end up working in unrelated fields. According to one report, only about a quarter of Americans with STEM degrees actually work in STEM jobs. That doesn’t necessarily mean there’s a surplus — it could mean that the jobs aren’t attractive enough, or that employers prefer foreign workers who are more mobile and less expensive. The visa’s defenders say that without access to global talent, U.S. companies will struggle to compete. Its critics say that the program has become a subsidy for firms that don’t want to invest in training or pay high wages.
For decades, U.S. universities have attracted top students from around the world. The draw wasn’t just the quality of education — it was the possibility of staying on after graduation, working in the U.S., and eventually settling down. The H-1B visa was seen as the bridge between study and citizenship. International students pay high tuition fees, often two or three times what domestic students pay. Many come from countries like India and China, where the cost of a U.S. degree represents a major financial commitment. The belief was that it was a good investment — that a degree from a U.S. university would lead to a job at a top US firm. The new fee throws that assumption into question. If the cost of hiring a foreign graduate rises to $100,000 – plus a high salary that takes the workers skills and qualifications into account, many employers will simply stop doing it. That means fewer job offers for international students, and less incentive to study in the U.S. in the first place. American Universities could see a drop in applications, especially in STEM fields where foreign students make up a large share of the graduate population.
There’s also a risk that the fee will push students towards other countries. Canada, the UK, Australia, and Singapore have all made efforts to attract global talent — offering post-study work visas, fast-track residency, and lower barriers to employment. If the U.S. makes it harder to stay, students will go elsewhere. For American universities, the impact could be financial as well as reputational. International students subsidize the system by paying higher fees. They bring diversity, research capacity, and global connections. If they stop coming, the effects will be felt across departments — not just in engineering labs, but in economics seminars, business schools, and medical research centers. The H-1B visa was never designed as a student pathway, but it became one by default. The new fee may close that path making foreign universities more attractive to international students.
The H-1B visa was designed to bring skilled workers into the United States. But if the cost of doing that becomes too high, companies may simply stop trying. The alternative – especially for the biggest firms - is to just hire abroad — and increasingly, that’s what they’re doing. During Trump’s first term, visa processing slowed down, denial rates rose, and scrutiny increased. Firms responded by moving jobs offshore. Instead of bringing workers into the U.S., they built teams in Canada, Mexico, India, and Eastern Europe. This new fee could accelerate that shift. Remote work technology has made doing this so much easier. A software engineer in Bangalore can now work for a U.S. company without ever setting foot in the country. The same goes for data analysts in Warsaw, biotech researchers in Singapore, and cybersecurity experts in Toronto. The pandemic normalized distributed teams. The visa fee gives companies another reason to keep them that way.
There’s also the question of competitiveness. If U.S. firms can’t hire the talent they need, they risk falling behind. And if the talent goes elsewhere — to countries with more welcoming immigration policies — the innovation goes with it. The executive order has already triggered legal debate- where immigration experts have pointed out that visa fees are governed by the Immigration and Nationality Act, which lays out specific rules for how fees can be assessed. The law allows for cost recovery — meaning that the government can charge a fee to cover the expense of processing applications — but it doesn’t authorize punitive pricing. The new fee goes far beyond what it costs to review an H-1B petition. The Cato Institute has warned that while the fee may lack a clear statutory basis, courts could still uphold it. Immigration law gives the executive branch wide latitude, and past challenges to presidential proclamations have had mixed results. In 2020, Trump tried to suspend entry for certain visa categories during the pandemic. That move was blocked in court. But other restrictions have survived. If the fee is challenged — and most observers expect it will be — the case could hinge on whether it’s framed as a national security measure, a labor market protection, or a revenue tool. The administration has been vague on that point. Commerce Secretary Howard Lutnick described it as a way to ensure companies only hire “valuable enough” workers. That’s not a legal standard. Until the courts weigh in, the fee stands and companies will have to decide whether to pay it, avoid it, or fight it.
Just days before the visa fee was announced, the Department of Homeland Security carried out the largest worksite immigration raid in its history. More than 400 agents descended on a Hyundai electric vehicle plant in Georgia, arresting 475 foreign workers. Most of those detained were South Korean nationals who had entered the country on the wrong type of visa. The raid was coordinated with state officials, who blocked roads and provided buses to transport the workers. The factory had — up until that point — been hailed as a major success story. Hyundai had committed $12.6 billion to the project, which was expected to create 8,500 American jobs in a region that had struggled with economic stagnation. Local governments had spent hundreds of millions upgrading infrastructure, deepening ports, and building schools and housing to support the plant. The raid put all of that at risk.
The workers were not undocumented in the traditional sense. Many had entered the U.S. legally under the visa waiver program or on B-1 business visitor visas — both of which allow short-term stays for business purposes, but not for hands-on labor. Immigration attorneys representing the workers said they were engineers and equipment specialists brought in to install and calibrate highly specialized machinery. According to their lawyers, it would take three to five years to train American workers to do the same work. South Korea is not a low-wage country. It’s a close U.S. ally and one of the largest foreign investors in American manufacturing. The raid triggered a diplomatic backlash. South Korea’s foreign minister flew to Washington. Hyundai executives were blindsided. Georgia’s Republican governor, who had championed the project, declined to comment, perhaps partially because his state had played a role in the raid. Georgia state troopers blocked off roads before the ICE agents went in, and Georgia Department of Corrections buses were used to take the Korean workers away.
The episode exposed a mismatch between American immigration policy and industrial policy. The federal government wants foreign companies to build in America — but its immigration rules make it extremely difficult for them to bring in the people they need to get the job done. It raises the question: is the United States still in the business of doing business — or is the government just shaking down companies for fees, in the style of a third-world country?
For decades, the U.S. offered a predictable route for skilled migrants: earn a degree, secure a job, and work towards citizenship. The H-1B visa was the legal instrument that made this possible. The proposed fee introduces a financial barrier that could exclude some of the best applicants from middle-income countries where the fee exceeds annual salaries. While this might be bad for the United States – it could be good for countries like China and India. Talent that once left those countries - now might remain. After the 2008 financial crisis, India and China absorbed returnees – who lost their visas during the slowdown – these workers seeded their own tech ecosystems at home. Universities hired them. Startups scaled with them. Cities like Shenzhen and Hyderabad built internal talent pipelines that reduced dependence on foreign training. The FT quoted Amitabh Kant – a man who helped organize India’s G20 presidency a few years ago who argued that this rule would “choke US innovation and turbocharge India’s”. He said that “by slamming the door on global talent, America pushes the next wave of labs, patents, innovation and start-ups to Bangalore, Hyderabad and Pune. According to the FT - Adani Group, one of India’s largest conglomerates, says that they are welcoming H-1B holders back to India to apply for roles, touting the growing entrepreneurial environment in India.
There is still a trade-off though – Workers who move abroad send billions of dollars back home in remittances, which support families and fund consumption – this flow will disappear – or at least reduce - if people stay at home. But - retained talent does something that remittances can’t: it builds institutions. The new visa fee may accelerate a shift that is already in motion - where countries that once exported talent as an economic strategy are now investing in retention.
The tech industry has long been one of the biggest beneficiaries of the H-1B visa program. Its leaders have lobbied for more visas, faster processing, and easier paths to permanent residency. But since the announcement of the $100,000 fee, most of them have gone quiet. There have been no open letters. No coordinated pushback. No major statements from the CEOs of the companies that rely most heavily on foreign talent. The same executives who once warned that restrictive immigration policies would drive innovation overseas now have nothing to say.
There are a few exceptions. Garry Tan, the CEO of Y Combinator, called the fee “a massive gift to every overseas tech hub” and warned that it would “kneecap startups.” Elon Musk, who entered the U.S. on a student visa and later held an H-1B, has defended the program in the past — though he hasn’t commented on the new fee. The silence may be strategic. CEO’s appear to be wary of picking a fight with a White House that has shown a willingness to retaliate. Why voice your criticism of tariffs openly when dropping off a gold trophy for the president can get them waived? But the lack of public opposition has left foreign workers — and the universities, hospitals, and startups that depend on them — without a clear advocate.
The H-1B fee has exposed a fault line within the Republican coalition — between the populist base that wants to restrict immigration – no matter what the cost - and the tech elite that helped fund Trump’s return to power. On one side are figures like Laura Loomer- who seems to have a timeshare on her face shared with Kristi Noem - she has spent years attacking the H-1B program and accusing tech companies of replacing American workers with cheaper foreign labor. On the other side are people like Elon Musk, who has defended the program and credited it with helping build companies like Tesla and SpaceX. The tension came to a head last year when Loomer attacked Sriram Krishnan — an Indian-born U.S. citizen — after he was named a senior adviser to Trump on AI policy. Loomer accused him in a tweet filled with grammatical errors and misspellings on “The everything app – formally known as twitter - of wanting to “remove all restrictions on green card caps in the United States”. Elon Musk responded by saying that the visa program made America strong – adding - “I will go to war on this issue the likes of which you cannot possibly comprehend.” After that, he didn’t say much... and neither did any of the other tech donors who backed Trump’s campaign. The MAGA base, meanwhile, has celebrated the move as a win for American workers. The tech industry sees immigration as a source of talent and growth while the MAGA base see it as a threat to wages and national identity. Trump is trying to keep both sides on board. The fee may be his way of doing that — a gesture to the base that doesn’t require a full-scale crackdown, but has a similar effect.
The United States has long been the place where the world’s best and brightest come to study, work, and build companies. The H-1B visa was far from perfect, but it was part of that promise — a way for skilled workers to contribute to the economy, and for employers to access the talent they couldn’t find at home. The new visa fee changes the terms of that deal. It incentivizes tech and engineering firms to expand in other countries — which is easier to do today than ever before. It makes it harder for medical professionals and scientists to move to the United States, and it reduces the attractiveness of American universities while killing a major revenue stream for them.
The deeper problem may be the overall pattern. The fee is just one of many policies — quickly enacted, inconsistently explained, and often revised — that have made the U.S. business environment increasingly difficult to navigate. We have seen tariffs that seem to change on a week by week basis, a 15% tax on AI chip sales to China, a push to change the Coca Cola recipe, demands for the firing of Intel’s CEO and settlements with media companies like CBS and Disney that coincided with regulatory approvals. Even the Cracker Barrel logo has not avoided presidential scrutiny. The Trump administration’s approach is less “small government” and more “hands-on” - a style that would have scandalized free-market Republicans a decade ago. Faced with a business landscape that shifts constantly based on executive orders, tweets, or handshakes - companies may adopt a wait-and-see approach to business planning— delaying hiring, investment, and expansion until the rules stabilize. That hesitation is costly. It slows growth, innovation and undermines America’s reputation as a reliable place to do business.
The policy might not survive a court challenge. It is unlikely to raise the revenue its supporters expect. But it has already done something more lasting. It has sent a message — not just to immigrants, but to investors, students, and employers — that the U.S. is no longer as serious about competing for global talent as it once was. That message may prove more expensive than the fee itself. If you found this video interesting, you should watch my video on whether the rich are really leaving Britain or not next. Don’t forget to check out our sponsor Covepure using the link in the video description – and see you in the next video – bye.