Trump slaps 'visa tax' on foreigners, but US will pay the price

Talent and innovation will move to other countries and there is no upside for American workers.

- Vikram Khanna

Last week, the American dream was snuffed out for millions of aspirants around the world, mainly from India. Effective from Sept 21, US President Donald Trump announced that there would be a new kind of tariff - not on goods or services, but on foreign skilled workers.

Applicants for H-1B visas - the main route through which global talent gets to work in the US - will be subject to a fee of US$100,000 (S$129.000), a more than 20-fold increase from what it was previously.

Ostensibly, this was aimed at curbing the abuse of the visa regime by companies that were accused of using it to recruit cheap labour, mainly from India, which accounts for around 70 per cent of the H-1B visas issued. But it was also aimed at encouraging US employers to hire more American workers instead of foreigners a longstanding demand of the Maga lobby.

The new policy led to an uproar from many companies that rely on foreign skilled workers, as well as confusion.

In the absence of clear guidelines, companies presumed at first that it would apply to existing holders of H-1B visas, who were urged not to leave the US or to return before Sept 21 to avoid being disallowed entry. But in what appears to be a partial walk-back on the policy - possibly the result of a compromise between the demands of the Maga lobby and the objections of tech companies - the Trump administration clarified that the fee would be levied only on new applicants and not to existing holders or to renewals. Moreover, it would be reviewed after a year.

More rollbacks are possible. Companies and immigration lawyers are expected to challenge the legality of the fee in courts, on the grounds that the president lacks the authority to impose it without Congressional approval.