By Michael Zenger
On 19 September, President Donald Trump signed a proclamation to bar H1-B workers from performing services in the U.S. unless they pay a fee of $100,000. Contrary to the initial announcement by Secretary of Commerce Howard Ludnick, the fee will not be annual but a one-time payment.
Trump presents this immigration policy as a quasi-tariff on labour. In his official White House statement, he categorises his decision to increase the fee for foreign applicants as combating the undercutting and replacement of American workers. This policy is supposedly in line with his “America First” principle but his related announcements of a “Gold Card” and an upcoming “Platinum Card” visa program indicate a different motive. With a significantly higher fee of $1 million individually or $2 million by a corporation for the Gold Card, and $5 million, with some tax exemptions for non-U.S. income, for the Platinum Card, these essentially amount to expensive green cards for sale.
It is no secret that the United States is in a dire financial situation. The U.S. federal debt is currently hovering around $36 trillion, with a federal deficit of $1.8 trillion. It seems that the increase in charges for foreign workers is rather part of a broader agenda to finance the rising debt, rather than a prioritisation of native workers. This mirrors the administration’s use of arbitrary tariffs on countries as a pressure mechanism, rather than a genuine protectionist policy, to negotiate better trade deals for the US.
With the new applicant fee, the goalpost shifts from limiting foreign labour in favour of American citizens to increasing foreign labour and subsequently increasing the money flowing into the country. It could even serve as a justification for eliminating the current annual cap of 65.000. To impose an actual tariff on labour and make it uneconomical for the main H1-B visa employers, the fee would need to be higher or be imposed annually. As it stands, a one-time fee of $100,000 is a negligible cost for large firms hiring a worker who is significantly more dependent on the company and less likely to demand higher wages for at least 6 years, not even counting the possibility of a subsequent green card. This is especially true for the majority of H1-B worker employers, which are big tech companies.
One indicator for Trump’s real stance on the visa program emerged last December, when an internal MAGA debate about H1-B visas erupted on the social media platform, X. Going against his more protectionist base, he backed Elon Musk and the pro-H1-B visa faction within the MAGA movement, praising the program: “I’ve always liked the visas. I have always been in favour of the visas.”
Another sign that the Trump administration may not be as radically anti-legal immigration as often portrayed is the 180-degree turn by several tech billionaires who would be affected most by a shortage of H1-B visa applicants. While certainly the most vocal, Elon Musk was not the only one who changed his tune regarding Trump. Meta CEO Mark Zuckerberg was an outspoken critic of Donald Trump prior to 2024 and played a crucial role in the Democratic victory of 2020. While he did not directly endorse Trump in the 2024 election, he admired Trump’s reaction after the failed assassination attempt on him last year. Moreover, he retrospectively criticized the Biden administration for imposing too much censorship on his social media platforms during COVID.
Furthermore, a significant number of Silicon Valley entrepreneurs raised money for Trump during his presidential campaign. Directly after Trump’s conviction in June 2024, a fundraiser in California brought in roughly $12 million. This event was hosted by David Sacks, a PayPal Mafia associate of Elon Musk and Peter Thiel, the long-time Republican donor and Palantir founder. Mr. Sacks is also one of the tech entrepreneurs who later gained positions in the Trump administration. While Sacks only holds an advisory position as “Artificial intelligence and crypto czar” and “Chairman of the President’s Council of Advisors on Science and Technology”, he still has the president’s ear.
Another donor who was at the June fundraiser who received a position in the administration is Jacob Helberg, now serving as “Under Secretary of State for Economic Growth, Energy, and the Environment.” He is a senior advisor to Palantir CEO Alex Karp, and his marriage to fellow PayPal Mafia associate Keith Rabois was officiated by OpenAI CEO Sam Altman. Additionally, Helberg was a leading voice for the PAFACA bill in April 2024, which forced the sale of TikTok under threat of a ban. That move recently cumulated in Trump’s order for TikTok to be sold to a consortium of U.S. companies, the main beneficiary being yet another tech billionaire, Larry Ellison of Oracle, whose company will ostensibly acquire the largest share of TikTok.
A few weeks after the June fundraiser, Trump promised to automatically staple green cards to diplomas on the “All-In Podcast”, which was hosted by David Sacks. Trump told Sacks and his co-hosts that “if you graduate or you get a doctorate degree from a college, you should be able to stay in this country,” even including two-year programs from junior colleges. Although this promise has not yet been fulfilled, the tech entrepreneurs in his circle will certainly continue to lobby for such a policy. Perhaps even more efficiently, through someone closer to Trump, since the person responsible for linking him to these donors has been none other than current Vice President J.D. Vance, who called Sacks “one of his closest confidants”. Sacks himself said, regarding Vance’s involvement, that “J.D. has been instrumental in making the Trump event happen.”
At the time, Vance had only served as Senator of Ohio for about a year and had not yet been selected as Trump’s VP nominee. Moreover, Peter Thiel bankrolled his 2022 Senate campaign with $15 million, marking it as the largest individual donation in U.S. Senate race history.
In general, Donald Trump’s own 2024 presidential campaign has differed significantly from his first, especially in terms of funding. In 2016, a major part of his appeal was his independence and self-funding, or reliance on small donations as the “people’s candidate.“
This shift is also reflected in the difference between donation breakdowns for his 2016 and 2024 campaigns. In 2016, small-dollar donations of $200 dollars or below, including from joint fundraising committees, made up nearly 70%, with large contributions barely reaching 14%. In contrast, by 2024, large contributions had grown to 70% and small ones had dropped below 30%.
In 2024, after years of legal litigation, Trump was indicted and on the verge of being imprisoned if he failed to win the election. Those skilled investors must have realized the opportunity and, to borrow a financial slogan, “bought the dip.”
Or, as Trump famously told Hillary Clinton during a 2016 debate about his real estate dealings during the housing crisis: “That’s called business, by the way.”
All in all, it is not entirely unrealistic that Trump’s hard rhetoric and his half-baked protectionist policies are intended to placate his more nationalist base, while allowing his Silicon Valley donors to continue benefitting from cheaper H1-B labour, paying his government a negligible fee to help offset some of the rising national debt.
The views expressed in this article are the author’s own and may not reflect the opinions of The St Andrews Economist.
Image credit: Daily Montanan