Trump’s H-1B visa changes could ‘kneecap startups,’ experts say

It has been a chaotic few days for the tech sector, and trade executives and specialists are nonetheless assessing how U.S. President Donald Trump’s newest immigration crackdown may form the way forward for their workforces. 

The Trump administration sparked widespread panic Friday after saying employers can pay a brand new $100,000 payment for H-1B visas, that are momentary work visas granted to extremely expert overseas professionals. These visas have underpinned the U.S. tech workforce for many years.

Some tech executives, together with Netflix co-founder Reed Hastings and OpenAI CEO Sam Altman, have lauded the adjustments to the H-1B program, however specialists instructed CNBC that the Trump administration’s adjustments may stop some tech corporations — particularly startups — from securing prime overseas expertise. These specialists stated the adjustments additionally run the danger of driving prime expertise towards different nations.

“The wanting it’s, it might be a catastrophe for America, for American corporations, American competitiveness, American innovation,” stated Exequiel Hernandez, an affiliate professor on the Wharton Faculty of the College of Pennsylvania.

The present annual cap for H-1B visas is at 65,000, together with 20,000 further visas for overseas professionals with superior levels.

In fiscal 2025, Amazon, Microsoft, Meta, Apple and Google are among the many prime 10 corporations that make use of probably the most H-1B holders. Distinguished tech executives like Microsoft CEO Satya Nadella, Google CEO Sundar Pichai and Tesla CEO Elon Musk have been H-1B recipients earlier of their careers.

As tech corporations scrambled to reply earlier than Trump’s proclamation went into impact at 12:01 a.m. ET on Sunday, the White Home quelled some issues on Saturday by clarifying that the payment is just not annual and would solely apply to new visas, not renewals for present visa holders.

Extra adjustments could possibly be on the horizon. 

The Trump administration teased a proposed rule on Tuesday that stated H-1B recipients ought to be chosen by means of a weighted course of as an alternative of a random one. The weighted course of would happen when the variety of requests for visas exceeds the restrict of accessible spots, and it might be based mostly on wage ranges, the proposal stated.

The proposed rule will formally publish within the Federal Register on Wednesday, and it is nonetheless topic to vary after the administration evaluations preliminary public suggestions.

Hastings known as the Trump administration’s $100,000 payment a “nice resolution,” in a post on X on Sunday.

“It is going to imply H1-B is used only for very excessive worth jobs, which can imply no lottery wanted, and extra certainty for these jobs,” he wrote.

OpenAI’s Altman expressed support for the updates throughout an interview with CNBC’s Jon Fortt on Monday.

“We have to get the neatest individuals within the nation, and streamlining that course of and in addition kind of outlining monetary incentives appears good to me,” Altman stated.

Traditionally, H-1B visas have price employers someplace between $2,000 to $5,000 per utility, relying on the dimensions of the corporate, in response to the Immigration Legislation Group. 

The brand new $100,000 payment is a giant leap for small, cash-strapped startups.

“You are not going to seek out many startups who’re going to be keen to pay $100,000 per H-1B, along with wage for that H-1B,” stated Adam Kovacevich, CEO of Chamber of Progress, a left-leaning tech trade commerce affiliation.

Even large tech corporations may really feel some ache and should reassess who they use H-1Bs for. However their deep pockets include benefits. 

“A giant agency like Microsoft or Google, despite the fact that it is not best for them, they’ve workarounds,” stated Wharton’s Hernandez. “They’ll offshore jobs, or they’re those who could make acquisitions.”

Garry Tan, the CEO of the favored startup accelerator Y Combinator, criticized the Trump administration’s new payment, writing in a LinkedIn post that “it kneecaps startups” and is a “large present” to abroad tech hubs.

“In the course of an AI arms race, we’re telling builders to construct elsewhere,” Tan wrote. “We’d like American Little Tech to win—not $100K toll cubicles.”

China and different opponents loom massive

U.S. tech corporations large and small are fiercely competing with each other – and the remainder of the world – as they race to develop probably the most superior AI fashions and functions. Organizations like Meta have shelled out billions of dollars to recruit prime AI expertise in an effort to try to achieve an edge.  

The Trump administration’s adjustments to the H-1B program may complicate comparable recruiting efforts. 

“What this does is that it offers our opponents, different nations, locations like Asia, Canada, Europe, they will then appeal to these workers to create new improvements,” stated Steven Hubbard, an information scientist on the American Immigration Council, which is a nonprofit for immigration advocacy and analysis. 

One large competitor within the struggle for expertise is China. The world’s second-largest financial system has lengthy fought in opposition to the U.S. for tech dominance, and extra just lately the AI race.

Earlier this 12 months, Chinese language AI agency DeepSeek rattled international markets after claiming to create a big language chatbot that outperformed opponents at a fraction of the associated fee. The information raised questions over the numerous sums that American tech corporations are shelling out on AI.

Some specialists fear that visa adjustments may deal a victory into China’s fingers, sending prime expertise abroad. The transfer may deter overseas college students from attending college within the U.S. as uncertainty hangs over their post-graduation job prospects.

“These college students are going to take a look at this surroundings and keep dwelling,” stated Greg Morrisett, vice provost at Cornell Tech. “It is giving a leg as much as each China and India by way of feeding their startup ecosystems.”

For Bradley Tusk, the CEO of Tusk Enterprise Companions, the adjustments to the H-1B program are merely “horrible.” American corporations should have entry to prime expertise with the intention to compete on the highest ranges, he stated.  

“America’s aggressive benefit has at all times been the power to draw the perfect expertise from around the globe,” Tusk stated. “To restrict our capability to recruit and compete is illogical.”

WATCH: JPMorgan CEO Jamie Dimon speaks out on H-1B visa changes