US President Donald Trump shook thousands of American dreams this weekend with an abrupt decision to slap a $100,000 fee on skilled worker permits – the H-1B visas. What followed was panic, chaos and a hasty White House climbdown.
Silicon Valley firms, which employ a major chunk of immigrant workers in the US, advised employees against travelling outside the US as overseas workers scrambled for flights amid fear of not getting re-entry under the new diktat. To calm the storm, the White House issued a clarification that the hefty fee will only apply to new applications and was a one-time measure.
How Trump’s Move Will Impact The US Economy
However, economists believe that Trump’s move could hurt US economic growth more than it would impact the immigrants.
Experts pointed out that American tech firms rely heavily on H-1B and similar visas to hire engineers, scientists and coders from overseas, particularly India.
By making the visa expensive, the Trump administration is making it difficult for companies to attract foreign talent, said Atakan Bakiskan, an economist at the investment bank Berenberg, while talking to The Guardian.
He labelled the move an example of the Trump administration’s “anti-growth policymaking” and said the brain drain will weigh heavily on productivity.
Analyst firm Berenberg recently lowered its estimate for US economic growth from 2 per cent at the start of the year to 1.5 per cent. Bakiskan warned that if Trump doesn’t change his anti-immigrant path, the 1.5 per cent forecast “may soon look optimistic”.
“Investments in artificial intelligence are unlikely to offset the damage caused by the loss of human capital under restrictive immigration policies,” he added.
Kathleen Brooks, the research director at the broker XTB, pointed out that Amazon, Microsoft, Meta, Apple and Google are some of the firms that employ the highest number of workers on H-1B visas.
“Although these companies have the money to afford the visas, other sectors that also rely on H-1B visas may struggle with future recruitment, for example, the health care and education sectors,” she said.
India’s Dominance In The H-1B Visa Programme
Indian immigrants have dominated the H-1B programme in recent years, making up more than 70 per cent of the recipients.
Today, Indian-origin executives run some of the top US firms, including Google, Microsoft and IBM, while Indian doctors make up nearly 6 per cent of the US physician workforce.
How India Could Absorb Shock
Experts said that India could feel initial shock, but the ripple effects could run deeper in the US.
Quoting IT industry body NASSCOM, BBC reported that visa fee hike could “disrupt business continuity for certain onshore projects” in the US.
Per the report, clients may push for repricing or delay projects until legal uncertainties are cleared, while companies may rethink staffing models – shifting work offshore, reducing onshore roles and becoming far more selective in sponsorship decisions.
Indian outsourcing firms like TCS and Infosys seem to be prepared for such a scenario by building local workforces and shifting delivery offshore.
Indian firms are also likely to pass on the increased visa costs to US clients, says Aditya Narayan Mishra of CIEL HR, a leading staffing firm.
“With employers reluctant to commit to the heavy cost of sponsorship, we could see greater reliance on remote contracting, offshore delivery and gig workers.”
