The US tech sector was thrown into turmoil on September 20, 2025, when the Trump administration announced a change in requirements for H-1B visas.
Under the new regulation, companies must pay a $100,000 annual fee per H-1B visa application. Following the announcement, Amazon, Microsoft, and Google urged employees abroad to return to the US immediately and keep any dependents from travelling abroad.
Although the administration quickly clarified that the changes would not impact current visa holders, the new fee directly contradicts the Trump administration’s attempt to grow US tech manufacturing. The US tech ecosystem has strongly benefited from its ability to attract global expertise and resources. Restrictive immigration policies not only stifle innovation but also incur millions of dollars in costs for companies trying to reshore production back to the US, potentially disincentivising companies from investing in the US tech industry.
The H-1B is the US’s largest non-immigrant temporary work visa program. It allows US companies to sponsor foreign employees in specialised fields, including IT, healthcare, and engineering. The scheme is capped at 65,000 visas per fiscal year, with successful applicants granted an initial three-year stay in the US that can be extended up to six years, followed by an opportunity to pursue permanent residency after these six years. According to January 2025 data from fwd.us, there are as many as 730,000 H-1B holders in the US, alongside an additional 550,000 dependents such as spouses and children.
The scheme is primarily used by US and Indian tech companies to bring high-skilled foreign employees to the US. Around 70% of H-1B visa recipients are from India, with another 10% from China. Amazon has the highest number of workers on H-1B visas, with more than 10,000 H-1B approved applications in H1 2025. Tata Consultancy Services (TCS), Microsoft, and Meta are also big employers of H-1B recipients, with more than 5,000 approvals each in H1 2025.
H-1B visas have been a point of contention in US politics for some time. Announcing the new $100,000 fee, which company sponsors will have to pay per visa recipient, the Trump administration said that the visas were being “abused” to undercut US wages and “outsource IT jobs to lower-paid foreign workers.”
Alongside its anti-immigration stance, the core of the Trump administration’s economic policy involves reindustrialising the US manufacturing sector. Advanced manufacturing industries, such as the tech and auto sectors, are incentivised to build factories and assembly plants in the US.
While the US has always had a strong auto manufacturing industry, its tech industry has outsourced manufacturing and services to low-cost countries for decades. As a result, the US labour market has limited expertise in those tech areas. The H-1B visa helps companies address that skills shortage by allowing them to import educated and skilled foreign workers.
The use of H-1B visas is even more relevant now that tech companies face high import tariffs and are encouraged to use government subsidies and tax credits from the 2022 CHIPS Act to reshore manufacturing back to the US. In 2024 and 2025 alone, Big Tech has pledged more than $1trn to reshoring efforts. The H-1B visa program helps bridge the gap between the tech industry’s plan to reindustrialise the US and the absence of high-skilled workers in the US tech manufacturing labour force.
As an example: TSMC, the world’s leader in advanced chip manufacturing, is building three chip fabrication plants in the US. This project should be hugely beneficial for the US’s position in advanced technologies, but the US offshored most of its chip manufacturing back in the 1980s and has never developed its advanced chip manufacturing capabilities. For this project’s success, TSMC will rely on high-skilled foreign labour, predominantly from Taiwan, to fill its manufacturing facilities.
Over time, the US academic system will adapt to new industry demands, attract funding, and offer the necessary training to support the domestic tech industry. However, this will not happen overnight. Beyond the skills gap, there are other financial hurdles facing the US labour market. The US tech industry began offshoring manufacturing due to the availability of skilled, cheap labour in countries like India. Today, US wages remain higher than foreign employee salaries.
H-1B visas only make up around 5% of total immigration visas issued in the US annually. However, this shift towards more restrictive immigration control could seriously impact the US tech ecosystem. It may stifle US tech innovation if imported talent cannot work in the US. Notably, many US-based tech executives, like Alphabet CEO Sundar Pichai and Broadcom CEO Hock Tan, moved to the US on student or work visas at the start of their careers.
In general, restrictive immigration policies have a detrimental impact on advanced manufacturers’ planned US investments. They increase the cost of moving production to the US and impact the existing labour force. Specifically, the Trump administration’s planned mass deportations will have implications for the cost and availability of labour for constructing factories, plants, and data centers to support the growth of the US tech sector. Altogether, restrictive immigration policies may discourage companies from moving production to the US, as the financial burden of reshoring outweighs the benefits of circumventing the trade restrictions or potential penalties of selling to the US market.
“Restrictive immigration policies will hinder the US tech sector” was originally created and published by Verdict, a GlobalData owned brand.
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