Startup founders say Trump’s $100K H-1B fee is a ‘talent tariff’ that will hurt innovation

Amr Awadallah, founder of AI startup Vectara, had two reactions when he heard about changes to the H-1B visa program that raise the application fee for each visa to $100,000. He was not surprised. But he was dismayed. “I can’t afford to pay $100,000,” Awadallah told TechCrunch. He believes it’s too high for many startups and will price them out of hiring internationally.

The H-1B visa was created to allow companies to hire skilled talent from a worldwide market for such occupations as IT and engineering. On Friday, Trump announced that the fee hike would increase from $2,000-$5,000 to $100,000 per application. Critics of the fee hike note that this visa helped bring in people who have gone on to run multibillion-dollar companies, including Google’s Sundar Pichai, Microsoft’s Satya Nadella, and Elon Musk.

“The impact will be severe on the competitiveness and innovation of smaller startups compared to the hyperscales,” Awadallah said. While Big Tech can more easily afford such fees, startups will miss out, impacting innovation negatively in the long term. According to data shared with TechCrunch, it could cost the tech industry $5.5 billion a year to hire H-1B tech workers under the new fee.

Silicon Valley founders say they look worldwide because there is a shortage of technical talent in the U.S., especially for skills like AI engineering. Hemant Mohapatra, a partner at Lightspeed Venture Partners, said expensive barriers could leave an innovation gap because a large percentage of unicorns are founded by immigrants.

U.S. startups are now exploring options like O-1 visas or international remote work. Jack Thorogood, CEO of Native Teams, noted a 50% increase in U.S. companies exploring visa-free global hiring. Markets like Canada, Germany, and the U.K. are already serving as landing spots for companies opening international offices as the U.S. raises barriers.