About a month ago, President Trump imposed a staggering $100,000 fee on each H-1B visa, which is a non-immigrant visa that allows U.S. employers to temporarily hire foreign workers in specialty occupations (e.g., STEM). Per his executive order, Trump believes that the H-1B program is displacing skilled Americans while posing a national security risk. Trump's concern is that foreign workers replace American workers in tech fields and that the program is exploited for labor cost reduction, although the Federal Reserve Bank of Richmond found that to be untrue (Morales, 2025). It is true that the fee does not apply to current holders or renewals, but it will have damaging effects all the same.
I wanted to hold off on writing on this topic until there were at least some studies showing estimates, however preliminary they might be. Now I have something to write about. A study from Oxford Economics looked at the effects of Trump's immigration policies. The study shows that there will be 750,000 legal immigrants, which is 140,000 fewer immigrants than prior to Trump's policy. The study does not isolate the visa fee's effects because it is intertwined with other policies. At the same time, the fee considerably contributes to this slowdown of skilled labor inflows. This lines up with the prediction of JPMorgan Chase's economists that Trump's fee will lower H-1B visa authorizations by as many as 5,500 per month. Another major consequence of this fee is that, according to market research firm Forrester, buyers ought to expect a 2-3 percent increase in onsite billing rates for new contracts because of the higher labor costs.
There are no other visa fees to compare this to because there has never been anything in U.S. economic history this exorbitant. That is why I have to go to the next-best proxy: the H-1B cap. The cap is different in that it is a hard limit. Once the cap is reached, there are no new visas. At least with the visa fee, a company could theoretically hire if they are willing to pay the price. However, this high rate will deter H-1B hiring and price many companies out of hiring H-1B recipients, as the JPMorgan Chase estimate indicates. The visa cap and the visa fee are two sides of the same coin because they are government-imposed barriers to the influx of skilled labor.
I pointed out as early as 2017 what happens when the H-1B supply is restricted: slower innovation, reduced competitiveness, and more offshoring or automation instead of hiring H-1B workers. An economist from the Peterson Institute for International Economics, Michael Clemens, demonstrates in his September 2025 report how beneficial H-1B visas have been. From 1990 to 2010, H-1B visa holders were responsible for 30 to 50 percent of all productivity growth in the United States (Peri et al., 2015). That includes Vinod Dham, the H-1B visa holder who led the team that launched the first Pentium processor.
It will be the startups and smaller businesses that get harmed the most by this policy. Only the largest firms will be able to afford the fee. For context, the H-1B visa fee prior to Trump's executive order was $1,500, which represents a hike of over 6,500 percent. Legal sponsorship already costs $10,000. Throwing on an additional $100,000 is not going to make companies want to hire domestic employees.
The visa fee is similar to minimum wage in some ways, although the minimum wage is a more direct cost than the visa fee. Both act as price floors on labor that reduce demand for the affected labor. In both instances, they are advocated for to protect workers, but the result is the opposite. As the Manhattan Institute points out, the visa fee will push employers to offshore technology and research or to automate. Both outcomes will lower U.S. employment, which is contrary to Trump's intent. This is similar to how the minimum wage incentivizes firms to either cut workers' hours, cut workers' benefits, let workers go, or automate.
The opposite effect is also observable. According to the Partnership for a New American Economy, each H-1B visa recipient results in 1.8 new jobs. This is because H-1B workers often complement U.S. workers to be more productive in such areas as management, design, marketing, and sales. Creating a shortage, much like Trump is doing, will delay projects and reduce the competitiveness of U.S. companies, which undermines the U.S. economy that Trump thinks he is helping.
The reality is that the H-1B visa program has vast benefits to the U.S. economy. A dynamic economy helps all workers prosper. It is also why Trump's mass deportation causes such negative economic impacts as lower GDP, employment, and wages. Trump would be more effective if he were to focus on education, apprenticeships, or workforce development. Instead, Trump chose a de facto tax on talent that effectively guts the H-1B program. This means the high-skilled workers will go elsewhere, such as Europe, Canada, or Australia. As a result, Trump is starving the United States of global talent instead of making America great again.
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