Trump's H-1B Visa Fiasco

One point that I have repeatedly attempted to stress is that with autocratic government comes incompetence. The reason for that is simple. An autocrat surrounds himself with those chosen for loyalty rather than ability. For all the talk of Benito Mussolini making the trains run on time, he did not, in fact, make the trains run on time. There is a belief in some quarters that dictatorships may have political disadvantages, but that they are able to "get things done." That is almost never the case. Instead, such governments tend to be replete with corruption and incompetence. We saw that yesterday when the President of the United States, a man with no medical training, took the advice of the Secretary of the Department of Health and Human Services, another man with no medical training, and recommended an unproven treatment for autism in the form of a drug in which the Administrator of the Centers for Medicare and Medicaid Services holds a financial interest. This man at least has medical training, though it is as a heart specialist rather than a neurologist or other specialty related to autism. Moreover, he is best known as a television celebrity doctor. Another example of incompetence occurred this past Friday when cult leader, convicted felon, and failed President Donald Trump issued a proclamation.

On Friday, with little warning and taking most people by surprise, Trump issued a proclamation titled, "Restriction on Entry of Certain Nonimmigrant Workers" that restricted the entry into the United States of nonimmigrants holding H-1B visas unless they had paid a $100,000 supplemental fee. This immediately turned into a shambles. The plain reading of the proclamation seemed easy enough to understand. In Section 1 it said:

the entry into the United States of aliens as nonimmigrants to perform services in a specialty occupation under section 101(a)(15)(H)(i)(b) of the INA, 8 U.S.C. 1101(a)(15)(H)(i)(b), is restricted, except for those aliens whose petitions are accompanied or supplemented by a payment of $100,000 — subject to the exceptions set forth in subsection (c) of this section.

This was reinforced in Section 3 which said:

The restriction on entry pursuant to section 1 of this proclamation shall apply only to aliens who enter or attempt to enter the United States after the effective date of this proclamation as set forth in section 1(a) of this proclamation.

The proclamation specified that the effective date of the proclamation would be "12:01 a.m. eastern daylight time on September 21, 2025." Therefore, the proclamation seemed to say that anyone trying to enter the U.S. on an H-1B visa beginning September 21 would be required to either pay $100,000 or would be denied entry. Needless to say, this set off chaos among many U.S. corporations and H-1B employees who were currently travelling abroad.

The immediate advice from employers to H-1B holders who happened to be outside the U.S. was "get back here quickly." Microsoft, for instance, provided guidance saying, "we strongly recommend that you do what you can to return to the U.S. tomorrow before the deadline." The company acknowledged that "there isn't much time to make sudden travel arrangements" but encouraged those in this situation to "do your best to return." WIRED published the stories of what several individuals went through as a result of the proclamation. One woman had just landed in her hometown in China when she was told by her employer that she should return. She boarded a plane back to the U.S. two hours later without having been able to see her family. WIRED also described an accountant who "had to spend $3,800 on a last-minute ticket from Beijing to Los Angeles. Meanwhile, he also lost about $5,000 on nonrefundable courses and travel bookings that he had paid for." A finance worker in New York had just boarded a plane to Paris when she realized that she could not risk leaving the country. After pleading with flight attendants, the "pilot agreed to take the plane back to the gate" even though it had already started taxing to depart. She was able to debark and returned home. Similarly, an Emirates Airlines flight bound for Dubai from San Francisco was delayed for more than three hours after passengers learned of the $100,000 fee. According to Aviation Analysis, the "Emirates’ captain addressed the matter directly, informing passengers that those who no longer wished to travel would be permitted to disembark." The article reports that "dozens of passengers" decided not to risk flying.

Corporations had many unanswered questions about the proclamation, and the White House was slow to provide answers, especially those that were authoritative. This is an administration whose normal workflow is to react to unexpected statements by the President. This was one such case, but nobody seemed to know anything beyond what the proclamation stated. At nearly 3:00 p.m. on Saturday, the day after Trump's proclamation and just hours before it would go into effect, an X account named "Rapid Response 47" that describes itself as the "Official White House Rapid Response account" tweeted that "Corporate lawyers and others with agendas are creating a lot of FAKE NEWS" and that the proclamation did not apply to anyone with a current visa. The account also claimed that the "Proclamation does not impact the ability of any current visa holder to travel to/from the U.S." The tweet received a Community Note pointing out that "None of the exceptions described here are in the text of the President’s Proclamation." The question for visa holders and their employers now was whether to trust this account.

A little over an hour after that, White House Press Secretary Karoline Leavitt tweeted more clarifications. She wrote that the $100,000 would not be an annual fee and that those who already hold H-1B visas would not be charged to re-enter. She also said that the fee would only apply to new visas. Again, a Community Note was added saying that "United States Commerce Secretary Howard Lutnick repeatedly said in an Oval Office briefing that this was an annual fee." Apparently, one hand of the White House had no idea what the other hand was saying. Hours after this, the first clearly official statement clarifying the impact of the proclamation was released. U.S. Citizenship and Immigration Services released a memorandum repeating most of the points that Leavitt had made. This letter came just over 6 hours before the deadline and after most of the damage had already been done.

While the immediate panic had proven unnecessary, many began to focus on the longer-term impact. The White House contention was that the H-1B program is being abused, and foreign employees who accept lower wages are replacing American workers. While this is a popular belief, the White House data supporting the suggestion was not overly strong. One study cited in the proclamation was from 2017. It is not clear how relevant that is today, especially given the intervening pandemic that caused significant changes in the employment landscape. Many observers doubted that there are enough Americans to fill the jobs held by H-1B visa holders. This led to the suggestion that the proclamation could lead to companies moving operations abroad, where visas would not be needed. In that case, the proclamation could actually lead to Americans losing jobs rather than gaining them.

Subsection (c) of the proclamation allows for a range of exceptions to the $100,000 fee. Exceptions can be made for an individual, a company, or an entire industry at the discretion of the Secretary of the Department of Homeland Security. This suggested to some that the proclamation was nothing but a shakedown scheme. Trump has shown a propensity for using the tools of government to demand concessions from companies. For instance, when Nippon Steel wanted to acquire U.S. Steel, Trump would not approve the deal until he was given a "golden share" in the corporation. He would not provide Intel with money that it had been awarded during the Biden administration until it allowed the government partial ownership. Trump refused to grant Nvidia export licenses for some of its most advanced chips until he was promised a share of the profits. He has withheld approvals of media company mergers until he received concessions, including the firing of late-night comics. Why, therefore, would Trump offer exceptions to his proclamation for nothing? I suspect that behind the scenes, especially in the tech industry, company leaders are attempting to figure out what this will cost them.

While it is bad enough that the proclamation was rolled out so clumsily, that sort of incompetence is to be expected from this White House. But there were other ramifications that were not noticed until the proclamation was already in effect. While most observers were focused almost exclusively on the impact of the proclamation on the tech industry, others started to point out the importance of foreign doctors in the U.S., especially in rural areas. According to Bloomberg Law, "As of June, more than 4,000 hospitals and research centers sponsored visas." A map accompanying the article shows that physicians with H-1B visas are heavily concentrated in central, mostly Republican states. According to the article, H-1B visas are "particularly helpful for rural communities, where doctors and other providers are often in short supply. Most areas of the US that lack sufficient primary care doctors are rural, according to a 2024 government analysis." Leave it to Trump to proclaim a policy that will leave his base without doctors. 

In reaction to concern about the impact of the proclamation on medical services in rural areas, Trump administration officials suggested that doctors could be exempted from the fee. This was hinted at in an email from White House spokesperson Taylor Rogers to Bloomberg Law. However, Rogers did not offer firm assurances, and nothing official has occurred. Therefore, at the moment, the $100,000 must remain a concern.

The U.S. has become an extremely hostile environment for foreign workers. The slightest irregularity in immigration paperwork can lead one to be refused reentry, detained, or deported. The recent detention and deportation of 400-some South Koreans from a battery factory in Georgia showed just how unstable the U.S. is right now, even for those with work permits or business visas. Ironically, the official solution for South Korean workers such as those is H-1B visas. Does anyone believe that South Korean companies will pay $100,000 per employee to send folks here to train Americans and create American jobs? Again, this is governance by incompetents who can't see further than the length of their noses.