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

It’s been a chaotic few days for the tech sector, and industry executives and experts are still assessing how U.S. President Donald Trump’s latest immigration crackdown could shape the future of their workforces. 

The Trump administration sparked widespread panic Friday after announcing employers will pay a new $100,000 fee for H-1B visas, which are temporary work visas granted to highly skilled foreign professionals. These visas have underpinned the U.S. tech workforce for decades.

Some tech executives, including Netflix co-founder Reed Hastings and OpenAI CEO Sam Altman, have lauded the changes to the H-1B program, but experts told CNBC that the Trump administration’s changes could prevent some tech companies — namely startups — from securing top foreign talent. These experts said the changes also run the risk of driving top talent toward other countries.

“The short of it is, it would be a disaster for America, for American companies, American competitiveness, American innovation,” said Exequiel Hernandez, an associate professor at the Wharton School of the University of Pennsylvania.

The current annual cap for H-1B visas is at 65,000, along with 20,000 additional visas for foreign professionals with advanced degrees.

In fiscal 2025, Amazon, Microsoft, Meta, Apple and Google are among the top 10 companies that employ the most H-1B holders. Prominent tech executives like Microsoft CEO Satya Nadella, Google CEO Sundar Pichai and Tesla CEO Elon Musk were H-1B recipients earlier in their careers.

As tech companies scrambled to respond before Trump’s proclamation went into effect at 12:01 a.m. ET on Sunday, the White House quelled some concerns on Saturday by clarifying that the fee is not annual and would only apply to new visas, not renewals for current visa holders.

More changes could be on the horizon. 

The Trump administration teased a proposed rule on Tuesday that said H-1B recipients should be selected through a weighted process instead of a random one. The weighted process would take place when the number of requests for visas exceeds the limit of available spots, and it would be based on wage levels, the proposal said.

The proposed rule will officially publish in the Federal Register on Wednesday, and it’s still subject to change after the administration reviews initial public feedback.

Hastings called the Trump administration’s $100,000 fee a “great solution,” in a post on X on Sunday.

“It will mean H1-B is used just for very high value jobs, which will mean no lottery needed, and more certainty for those jobs,” he wrote.

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

“We need to get the smartest people in the country, and streamlining that process and also sort of outlining financial incentives seems good to me,” Altman said.

Historically, H-1B visas have cost employers somewhere between $2,000 to $5,000 per application, depending on the size of the company, according to the Immigration Law Group. 

The new $100,000 fee is a big jump for small, cash-strapped startups.

“You’re not going to find many startups who are going to be willing to pay $100,000 per H-1B, in addition to salary for that H-1B,” said Adam Kovacevich, CEO of Chamber of Progress, a left-leaning tech industry trade association.

Even big tech companies could feel some pain and have to reassess who they use H-1Bs for. But their deep pockets come with advantages. 

“A big firm like Microsoft or Google, even though it’s not ideal for them, they have workarounds,” said Wharton’s Hernandez. “They can offshore jobs, or they’re the ones who can make acquisitions.”

Garry Tan, the CEO of the popular startup accelerator Y Combinator, criticized the Trump administration’s new fee, writing in a LinkedIn post that “it kneecaps startups” and is a “massive gift” to overseas tech hubs.

“In the middle of an AI arms race, we’re telling builders to build elsewhere,” Tan wrote. “We need American Little Tech to win—not $100K toll booths.”

China and other competitors loom large

U.S. tech companies big and small are fiercely competing with one another – and the rest of the world – as they race to develop the most advanced AI models and applications. Organizations like Meta have shelled out billions of dollars to recruit top AI talent in an effort to try and gain an edge.  

The Trump administration’s changes to the H-1B program could complicate similar recruiting efforts. 

“What this does is that it gives our competitors, other countries, places like Asia, Canada, Europe, they can then attract these employees to create new innovations,” said Steven Hubbard, a data scientist at the American Immigration Council, which is a nonprofit for immigration advocacy and research. 

One big competitor in the war for talent is China. The world’s second-largest economy has long fought against the U.S. for tech dominance, and more recently the AI race.

Earlier this year, Chinese AI firm DeepSeek rattled global markets after claiming to create a large language chatbot that outperformed competitors at a fraction of the cost. The news raised questions over the significant sums that American tech companies are shelling out on AI.

Some experts worry that visa changes could deal a victory into China’s hands, sending top talent overseas. The move may also deter foreign students from attending university in the U.S. as uncertainty hangs over their post-graduation job prospects.

“Those students are going to look at this environment and stay home,” said Greg Morrisett, vice provost at Cornell Tech. “It’s giving a leg up to both China and India in terms of feeding their startup ecosystems.”

For Bradley Tusk, the CEO of Tusk Venture Partners, the changes to the H-1B program are simply “terrible.” American companies have to have access to top talent in order to compete at the highest levels, he said.  

“America’s competitive advantage has always been the ability to attract the best talent from around the world,” Tusk said. “To limit our ability to recruit and compete is illogical.”

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