US employers are facing a $14 billion (€11.9 billion) annual bill for hiring skilled foreign workers after Donald Trump slapped a $100,000 fee on the cost of securing a visa for new employees to enter the country.
Late on Friday the US president signed a proclamation introducing a $100,000 application fee for the H-1B foreign worker visa.
Following chaos at airports on Saturday as workers hurried to return to the US, the White House clarified that it would apply only to new applicants starting from the next visa lottery in February onwards, not current H-1B holders.
The White House said the move was designed to encourage companies to hire American workers. Mr Trump’s proclamation said that some carve-outs would be offered at the administration’s discretion, but it was not clear how widely these would be available.
RM Block
More than 141,000 new H-1B visas were issued last year, according to figures from the US Citizenship and Immigration Services. If the number of applications continues at the same level with the new fee of $100,000 apiece, that would leave American companies paying $14 billion each year.
Silicon Valley relies heavily on H-1B visas to hire engineers, scientists and coders from overseas. The non-immigrant visa is also widely used by specialist industries including accountancy firms and healthcare companies. Roughly two-thirds of 2023 recipients worked in the IT industry, according to USCIS.
About 400,000 H-1B applications were approved last year; the majority were people renewing their visas.
Figures from the United States Citizenship and Immigration Services show that Amazon is, by far, the biggest user of the scheme, with Tata Consulting, Microsoft and Meta also sponsoring more than 5,000 workers under the scheme.
Prominent members of Mr Trump’s political coalition have previously expressed support for the H-1B programme, including his largest donor Elon Musk. But others such as former White House strategist Steve Bannon have called for the scheme to be abolished so that American workers are protected.
Garry Tan, chief executive of start-up incubator Y Combinator, said in a post on X that the decision by Mr Trump was a mistake that “kneecaps start-ups” and represented a “massive gift to every overseas tech hub” including Vancouver and Toronto in Canada.
“In the middle of an AI arms race, we’re telling builders to build elsewhere. We need American Little Tech to win – not $100K toll booths,” Mr Tan added.
Lawyers acting for big US companies told the FT that their clients were awaiting further clarification from the department of state, which issues visas and had yet to make any statement on Sunday. Companies were also considering bringing a legal challenge to contest the proposed fees.
“The executive branch has the authority to impose a fee to recoup money to administer the H-1B scheme,” said Matthew Dunn, a partner at law firm Herbert Smith Freehills Kramer. “To add on $100,000 is totally outside their regulatory power.
“We think it’s very likely that we will see a court intervention blocking this proclamation,” Mr Dunn added.
The president is facing more than 135 legal challenges and is awaiting a supreme court ruling on the validity of blanket tariffs he imposed on trading partners earlier this year, after two lower courts ruled that the move was unlawful.
The administration is expected to take forward wider revisions to the H-1B scheme as set out in Friday’s proclamation including lifting the benchmark salary used to determine whether a recipient’s visa should be approved.
Republican lawmakers have also called for H-1B visas to be allocated based on ranked salary rather than at random, as is the case with the current lottery.
Employers are considering switching to alternative visa types, including the L-1 category designed for management and employees with “specialised knowledge”. But the requirements of this scheme are more onerous as staff have to be employed overseas for at least one year.
Gary Cohn, a former economic adviser to Mr Trump who is now a vice-chairman at IBM, said the White House’s clarification meant that “everyone who’s got an H-1B visa understands their status and understands how it’s going to work”.
Speaking on the CBS Face The Nation programme on Sunday, Mr Cohn said the increased fee was a “good idea”.
Companies are “not just going to ask for a visa and put a name in the lottery unless that is a highly skilled person who you need, who you cannot hire in the US”, he said. – Copyright The Financial Times Limited 2025
