Trump’s H-1B Fee: His Proclamation, National and International Repercussions

On 19th September 2025, Trump issued a proclamation declaring that all new applicants for the H-1B visa would now be required to pay a $100,000 fee (£74,465). This sudden decision created mass panic as employers urged their overseas H-1B visa holders to return to the US. Hundreds of people booked last-minute flights out of fear they would be stuck abroad as the situation evolved. This story is not new; it has become an all-too familiar scene during the Trump administration. 

Despite the Trump administration later clarifying that this decision would only apply to H-1B visa applications that had not yet been filed, this latest development in Trump’s anti-immigration regime has left many wondering what the future has in store for all sorts of actors, including foreign skilled workers, international student graduates, and US and foreign tech companies. 

So is the effective dismantling of this program (through the creation of a fee that is often more than the entry-level salary these H-1B workers receive) at all justified? Do the points in President Trump’s proclamation stand? And what repercussions will this have on foreign and US workers, and foreign and American economies?

What is the H-1B Visa?

The H-1B Visa was signed into law by George Bush as part of the Immigration and Nationality Act of 1990 to combat a looming labour shortage by attracting highly skilled labour from abroad. Employers file an application with the government on behalf of the foreign worker, the application goes through a lottery system, and if selected, the H-1B visa grants them temporary status for three to six years. 

A very limited number of these visas are available each year. Barring some fluctuations in the past, 65,000 H-1B visas are available annually for bachelor degree holders, with another 20,000 for master’s degree holders.

The primary receivers of H-1B visas are Indian nationals, receiving 71% of the available H-1B visas, followed distantly by Chinese nationals at 12%. The primary fields they work in are computer-related (64%), engineering and architecture related (10%), education (6%) and other STEM roles like medicine, maths and physics. 

Though an H-1B does not grant residency status, many employers then go on to sponsoring their green card. This is often one of the only avenues for high-skilled foreign workers, as well as international student US graduates, to live and work in the US long-term and set themselves on a path to citizenship. In fact, millions of Indian-Americans received their US citizenship through their parents’ or their own use of the program. 

Trump’s recent proclamation: any factual basis?

Trump’s proclamation essentially and undemocratically rewrites the Immigration and Nationality Act, picking and choosing which immigrants he deems worthy. It states: 

'[Companies have used the program to] artificially suppress wages, resulting in a disadvantageous labor market for American citizens' and that 'the large-scale replacement of American workers through systemic abuse of the program has undermined both our economic and national security.'

So let us dissect the various parts of those statements. 

Has the program been used to 'artificially suppress wages' and has it been 'systemically abused'?

In terms of suppressing wages, on paper there are various regulations in place to ensure that this is not the case. Employers seeking H-1B visas for their hires must first consider domestic applicants to the position, and they must ensure that the H-1B workers get paid the same as, or more, than the median wage for American workers completing similar duties. They must then provide an assertion of their compliance to the US government.

However, in practice, this has not quite been the case, with the Economic Policy Institute estimating that about 60% of H-1B workers were receiving well below that median wage. 

In terms of ‘systemic abuse’ of the program, it is true that there have been episodes where the program was used to replace native workers with foreign-born ones. This can be seen in the Disney and Toys ‘R’ US scandals, where native-born workers were forced to train the foreign workers they were being replaced with, or with the firm Cognizant being charged with favoring over 2,000 H-1B workers over native-workers in their hiring practices. It is unclear however whether these are isolated incidents or form part of a 'systemic' misuse of the program. 

The short answer, then, is yes, there are instances in which the wages for H-1B workers were lower than for native-born workers, despite regulations to prevent this. It is also true that this program has not been without its flaws and has created opportunities for fraud and abuse. 

But has this created a disadvantageous labour market and 'undermined’ US economic security?

Looking only at the instances of wage suppression and fraud, in addition to the rising unemployment in computer-tech fields, the major sector employing H-1B workers, one might begin to see Trump’s reasoning for targeting this program. However, this is complicated by a series of factors.

Firstly, the amount of H-1B workers is negligible compared to the number of employed Americans in the US. An estimate from fwd.us puts the total number of H-1B holders in 2025 at 730,000, compared to the 163 million people employed in the US in September 2025. In other words, H-1B workers make up only 0.4% of the workforce, and can therefore be seen more as a scapegoat than a driver of the economy’s troubles. 

Furthermore, the presence of H-1B workers stimulates not only economic growth on an international level, but also almost directly contributes to the creation of new jobs for native-born workers. Business leaders, for example, say that H-1Bs is what helps US companies stay competitive and innovate on the global market, especially in the face of the rise of China and of AI, where there is still very little 'talent' to pick from. H-1B workers often fill a critical skills gap, and complement, rather than supplant the roles and skills that native-born workers take. A recent study has also shown that companies employing H-1B workers actually enjoy more economic growth and create more jobs for native-born workers, than companies not employing H-1B workers. 

Moreover, economist Madeline Zavodsky’s study for the National Foundation for American Policy found that H-1B workers do not negatively impact prospects for American workers, and in fact are correlated with decreased unemployment and quicker earnings for college graduates. Her analysis further found that an increase in the amount of H-1B workers by 1% boosted employment of other workers in that sector by 0.2%.

Despite incidents of fraud and abuse in this program, it is clear that its benefits far outweigh these costs, since H-1B workers stimulate not only a net increase in the growth of the overall economy, but also create a net increase of job openings for native-born workers.  

So when Trump’s proclamation states that the only exception to this new $100,000 fee would be if the Secretary of Homeland Security deemed H-1B employees’ work as contributing to 'the national interest' of the US, this does not follow logically. Foreign nationals’ work almost always overwhelmingly strengthens the US, even from just a purely economical standpoint. 

What about this program 'undermining national security'?

In terms of this program’s effects on national security, it depends on how one views 'national security'. If one considers 'undermining national security' to mean the weakening of ties between countries, the erosion of trust and a subsequent and increased move towards isolationism and suspicion, it is precisely the removal of this program that fulfills this definition. 

The US’s reliance on Indian skilled workers through the H-1B visa program had created a symbiotic relationship between the US and India. India benefited from the program because it gave rural coders life-changing opportunities due to the US’s significantly higher salaries, meaning they could go on to achieve the 'American dream' and launch their families into the middle class. Entire sectors in India, like real estate and airlines, also benefitted from catering towards these economic migrants. 

This could call into question issues of fairness—whether it is fair to punish nations like India, who were forced by the IMF and World Bank to undergo structural adjustment programs to achieve an essentially American conception of liberalisation, for making the most of their competitive advantage by way of cheap labour and internationalising it to the global labour market in a quintessentially (American) neoliberalist way. One could argue that Trump cannot retaliate against India for taking on too well the neoliberal ideals that the West (mostly America) imposed upon it, though this is beyond the scope of its article. 

For the US, on the other hand, this H-1B program meant start-ups, classrooms, labs, hospitals were filled with highly motivated, creative, and innovative talent that has contributed around $86 billion (£64 billion) to the US economy every year. $35 billion (£26 billion) of that amount comes through federal, state and local taxes that the H-1B workers and their families pay the US government, despite only being temporary ‘aliens’. 

The influx of economic migrants has also been far from a one-way street—experts say that large Indian tech companies, in their turn, recruit and train over 600,000 US employees, and invest over a billion dollars (£744, 000) to upskill almost three million US students across 130 universities.

For the Indian economy, the effective erasure of this program will deal a significant blow. The amount of remittances will significantly decrease and other economic partnerships with the US will weaken, all against the backdrop of a recently-imposed 50% US tariff on Indian products by President Trump. The announcement of the $100,000 fee has, understandably, spurred nationalism in the Indian Prime Minister Narendra Modi, who stated that his country must shift towards self-sufficiency, adding fuel to the fire of a global trend towards isolationism and protectionism. 

In terms of 'national security', then, it is the erasure of this program that feels more like blow, with American ties to one of the world’s fastest growing countries weakened almost to the point of severance. 

So what will this decision mean for the various people and institutions involved?

For foreign highly-skilled workers, this might now mean that they are either forced or motivated to look towards other countries for employment. The Canadian Prime Minister Mark Carney has been scrambling to seize an opportunity to welcome applicants that would have otherwise gone to the US. The Trump administration’s recent anti-immigrant actions, as well as this latest development, is tarnishing America’s appeal as such policies continue to send the message that foreign nationals are no longer wanted and valued in the US.

International students make up 73% of graduates in computer and electrical engineering in the US. Now those international graduates are left in a state of shock, with one of their most lucrative avenues for employment in the US shuttering up. Indian students in particular, who make up a quarter of international students in US universities, are left feeling they should have gone to university elsewhere. Atakan Bakiskan, who works at Berenberg investment bank, told the Guardian that many international students will be forced to leave after graduating and that this brain drain will negatively impact productivity. 

In terms of the professors themselves, the new H-1B changes means universities now have to start paying an exorbitant fee to hire any new foreign professor. This might create a shortage of foreign professors in universities due to the stratospheric costs that hiring them would incur, which in turn could lead to insular thinking in institutions that are meant to serve as bastions of diversity of thought and debate. For the Indian IT sector, which made well over half its revenue from shipping its skilled workers to the US, this means becoming more self-reliant in its sources of labour, and perhaps closing its gates to the US.

This decision might also have the opposite effect of what Trump intended—that of nationalizing the workforce and rooting (tech) companies to US soil. Some say that this policy might merely mean US companies will turn to offshoring their work and hiring foreign workers remotely. Some experts believe it would also lead to weakened US companies that are less competitive globally due to the lack of innovation and ideas that foreign highly-skilled workers brought to the organizations they worked for.

Rather than eliminating H-1B workers for all tech companies, which is what Trump probably intended, the biggest companies (who are also the biggest employers of H-1B workers) will keep being able to afford to hire people on H-1B visas, while small and medium businesses, and especially startups, will be hit the hardest. Similarly, while tech sectors might be relatively more insulated, other sectors like education and healthcare might find themselves facing labor shortages.

Trump’s hasty introduction of this fee, which will lead to the potential shuttering of the H-1B program, can then more be seen as a decision that will backfire not only in providing the promised results to American workers, but might also create a ripple effect of unintended social, economic and diplomatic repercussions. 

Image courtesy of Forprajeesh via Wikipedia Commons, ©2020. Some rights reserved.

The views and opinions expressed in this article are those of the author and do not necessarily reflect those of the wider St. Andrews Foreign Affairs Review team.