Source: Fortune
Summary
The Trump administration proposed a $103,265 surcharge on H-1B visas, aiming to offset immigration costs. The fee, which would affect 11,051 small businesses, faces a 30-day public comment period. Critics argue it could push companies to offshore jobs, harming startups. Research suggests the fee may reduce H-1B petitions, undermining its intended goal. The policy could shift visa sponsorship toward large companies and advanced workers, altering the talent pipeline.
Our Reading
The numbers tell one story.
DHS says the fee covers immigration costs, but the math is self-defeating.
Small businesses face a significant economic hit, while big companies adapt.
Startups lose access to critical talent, slowing innovation.
The fee could shrink the H-1B pool, making the program less effective.
Author: Evan Null
Big companies have options–startups don’t
Large corporations like Amazon and Microsoft can hire abroad or open foreign offices, giving them an edge over smaller firms. Startups, however, lack these resources and depend heavily on H-1B workers for growth. Research shows that losing H-1B talent reduces a startup’s chances of success, including patents, acquisitions, or IPOs. Small companies face a direct hit to profitability and innovation when they can’t access foreign talent.
Second and different attempt to charge six figures for foreign talent
This is not the first time the Trump administration has tried to increase H-1B fees. A previous attempt in 2025 was struck down by a federal judge. This time, the Department of Homeland Security is using a more standard rulemaking process, which may improve its chances of surviving legal challenges. The fee is meant to offset $8.8 billion in annual immigration costs, but critics say the logic is flawed.
The talent pipeline could change
DHS claims the fee won’t reduce the number of H-1B petitions, but experts disagree. The fee could lead to fewer entry-level workers and more sponsorship for high-level employees, favoring large companies. This shift could harm startups and reduce the number of international students coming to the U.S. for education, which in turn affects the talent pipeline for U.S. firms.
Small businesses face a significant economic impact
The proposed fee could force 76% of small businesses to experience a “significant economic impact.” These businesses often lack the resources to absorb the cost, making it harder for them to compete with larger firms. The fee may also discourage hiring foreign workers, further limiting the talent available to small companies. This could slow innovation and growth in sectors that rely on H-1B workers.
The fee’s logic is self-defeating
The government’s math assumes that the fee will be paid by employers, but if it deters hiring, the revenue won’t materialize. This creates a contradiction: the fee is meant to be a deterrent, but it also relies on employers paying it. Critics say the policy is flawed and may ultimately harm both businesses and the economy. Whether it passes or not, the debate highlights the challenges of balancing immigration policy with economic goals.
