Sky-high new visa fees imposed by President Trump have shocked Silicon Valley tech giants as they mull the rising cost of hiring global talent and new tactics the White House could use to keep Silicon Valley in check.
The tech industry was already running an economy with higher and more unpredictable tariffs when the Trump administration last week threw another curveball aimed directly at its bottom line: a $100,000 levy on visas used to hire certain skilled foreign workers. The industry relies heavily on the H-1B visa program to attract a wide range of engineers, programmers and other talent to the United States.
The implementation has caused confusion among businesses, immigration attorneys and current H-1B visa holders.
Over the weekend, the Trump administration clarified that the new fee will apply to new visas, is not annual, and does not prevent current H-1B visa holders from traveling domestically or internationally. Companies will have to pay a fee for any new H-1B visa petitions filed after a certain time on Sept. 21, the White House said.
On Monday, the Trump administration also clarified that some professions, such as doctors, may be exempt from the fee. Some observers are concerned that selectively levying tariffs could be a way for the White House to reward its friends and punish its detractors.
Meta, Apple, Google, Amazon and Microsoft are strengthening their ties to the Trump administration, committing to invest hundreds of billions of dollars in the United States.
However, immigration has long been a contentious issue between the Trump administration and tech company executives, some of whom held H-1B visas before becoming co-founders or executives of the world's largest tech companies.
One of the most vocal supporters of H-1B visas: Elon Musk, who supported Trump but publicly sparred with him after he led the federal government's cost-cutting efforts. Musk, who runs several companies including Tesla, SpaceX and xAI, is a naturalized US citizen born in South Africa and holding an H-1B visa.
Technology executives said the H-1B visa program has played a critical role in recruiting skilled workers. Competition to attract the world's best talent has been intensifying since the popularity of OpenAI's ChatGPT sparked a fierce race to rapidly advance artificial intelligence.
The new fee could slow California's progress and the U.S. position in the AI race by making it harder for companies (especially startups with less money) to attract foreign workers, experts say.
So far this fiscal year, more than 7,500 companies in California have applied for H-1B visas and 61,841 companies have been approved. data from the US Citizenship and Immigration Services show.
Tech companies are using the visa program to hire computer scientists and engineers because the U.S. doesn't produce enough workers with the necessary skills, said Darrell West, a senior fellow at the Brookings Institution's Center for Technology Innovation.
Trump “likes to talk tough on immigration, but he doesn't realize how important immigrants are to our economy,” he said. “Companies in technology, agriculture, hotels, restaurants and construction rely heavily on immigrants, and slowing this flow would have devastating consequences for companies in these areas.”
In its order, the Trump administration noted that some companies, such as information technology firms, are allegedly abusing the program, citing mass layoffs in the tech industry and the difficulty young college graduates face finding jobs.
“President Trump promised to put American workers first, and this common sense approach does just that by stopping companies from spamming the system and dragging down American wages,” White House spokesman Taylor Rogers said in a statement.
Economists and tech executives, however, point to other factors affecting hiring, including economic uncertainty due to tariffs, changing investments and the emergence of artificial intelligence tools that can perform tasks typically performed by entry-level workers.
California's unemployment rate of 5.5% in August was higher than the U.S. unemployment rate of 4.3%, according to US Bureau of Labor Statistics.
The rollout of the new changes has been “extremely chaotic,” and while the White House has tried to clear up some confusion, tech companies still have many questions about how the fee will work, said Adam Kovacevich, executive director of the Progress Chamber, a center-left tech policy coalition.
“You never know what the ultimate policy will be in a Trump world,” he said. “Someone in the administration makes an announcement, there's a backlash, and then they end up changing their plans.”
Tech companies are trying to walk a fine line in their relationship with Trump.
During Trump's first term, senior tech executives including those at Meta, Amazon, Google and Apple spoke about his administration's order to restrict travel from several Muslim-majority countries. But during his second term, those same leaders moved closer to the Trump administration, seeking to influence artificial intelligence policy and forge lucrative government partnerships.
They contributed to his inauguration fund, appeared at high-profile press events and attended a White House dinner, where Trump asked them how much they were investing in the United States.
Microsoft declined to comment. Meta, Google and Apple did not immediately respond to requests for comment.
Changes to the H-1B program could also worsen relations with other countries, such as India, that send skilled technicians to the United States, experts say.
Indian citizens are the largest beneficiaries of the H-1B visa program, accounting for 71% of approved petitions, followed by Chinese citizens (about 12%).
Some Indian venture capitalists and research institutes see a silver lining in this bleak future. On social media, some are writing that the uncertainty surrounding H-1B visa rules could encourage talented engineers to return home and create startups, thereby fueling India's tech sector. This will mean increased competition for US technology companies.
Kunal Bahl, an Indian technology investor and entrepreneur, wrote: “Come Build in India!” on social networks. His firm Titan Capital has launched a seed funding and mentoring program aimed at attracting students and professionals rethinking their future in the US after visa problems.
Global tech companies may also consider opening more centers overseas where employees can work remotely without having to move to the U.S., said Phil Fersht, founder and chief executive of HFS Research.
“The more the U.S. becomes a less attractive place to attract talent,” he said, “the more it will harm its economy.”
