While tech giants may be able to absorb the blow, President Donald Trump’s new $100,000 annual H-1B visa fee could prove to be an existential threat for startups and small businesses. This policy, announced Friday, threatens to cut off the flow of essential global talent that has historically fueled the growth of America’s most innovative new companies.
Startups often operate on lean budgets and rely on their ability to attract top-tier talent with equity and the promise of growth, rather than massive salaries. The H-1B program has been a critical tool for them to bring in specialized engineers and scientists who are in short supply domestically. An annual fee of $100,000 per employee would make hiring foreign talent an impossible luxury for most early-stage companies.
The administration’s justification for the fee, as articulated by Commerce Secretary Howard Lutnick, is to encourage the hiring of recent American graduates. “Stop bringing in people to take our jobs,” he said. However, many in the venture capital community argue this misses the point. They contend that startups hire H-1B workers to fill highly specialized roles for which there are often not enough qualified U.S. candidates, and these hires are critical for creating new products and, ultimately, more American jobs.
Venture capitalist Deedy Das warned that this move “drastically reduces [the US’s] ability to innovate,” a sentiment echoed across the startup ecosystem. The fear is that this policy will not only prevent new companies from getting off the ground but also encourage entrepreneurs to launch their businesses in other, more immigration-friendly countries like Canada or the UK.
Beyond the economic fallout, the policy’s legal foundation is being challenged. Experts claim the president lacks the authority to set such fees, meaning the rule will likely be tied up in litigation. But even the threat of such a fee could have a chilling effect on investment and hiring, casting a long shadow over the future of American entrepreneurship.