U.S. H-1B Visa application forms.Dado Ruvic/Reuters
Jonah Prousky is a freelance writer and PhD student at MIT
On Friday, U.S. President Donald Trump signed an executive action to attach a US$100,000 annual fee to H-1B visas. These three-year work visas are beloved by the tech industry. They were relatively cheap – previously, the cost of H-1Bs started at US$1,700 and ran up to US$4,500 for expedited processing – and they allowed U.S. companies to hand-pick top talent from around the world.
Getting an H-1B visa isn’t easy. The United States issues 65,000 H-1Bs each year (plus an additional 20,000 for individuals with a master’s or PhD from an American university). And, since demand for these visas exceeds supply, they are allotted using a lottery system.
The new fee will almost certainly face legal challenges – it looks a lot like a “tax,” which only the U.S. Congress can levy. But if it sticks, it could have surprising, positive knock-on effects north of the border.
Trump administration imposes $100,000 annual fee for H-1B visas
The vast majority of H-1Bs go to workers from India (71 per cent) and China (11.7 per cent), as of 2024. Canadians, by contrast, accounted for just 1.1 per cent of all H-1B visa holders that year. This is partly because Canadian and Mexican citizens are eligible for TN visas, which, just like the H-1B, lets them work and live in the U.S. for a maximum of three years. TN visas can also be renewed indefinitely and cost as little as US$56. But they are thought to be less desirable than H-1Bs, in that they don’t provide a path to citizenship.
For Canadians banking on the H-1B as a path to citizenship, this is bad news. But on the whole, the availability of TN visas means that most Canadians wanting to work in the U.S. still can, provided their company will sponsor them. The real squeeze will fall on nationals of other countries.
Under the new rule, whether or not it makes sense for employers to sponsor H-1Bs will vary. For instance, at one extreme, Meta recently made headlines for offering US$100-million pay packages to some AI engineers. In these cases – ultrahigh earners in specialized fields – an additional US$100,000 is a drop in the bucket.
At the other extreme, it has long been argued that U.S. tech companies use the H-1B to hire entry-level employees at a lower wage than they would otherwise pay to Americans. The H-1B was never designed for this – it’s meant for individuals with rare skills. By law, companies must pay H-1B visa holders the same as Americans. In practice, it’s an easy system to game. Companies can offer foreign workers lower-paying positions, at a wage that is commensurate with that position, and then ask the employee to do higher-level tasks once he/she is on the job.
So for entry-level employees, the new rule looks like it will have the intended effect. That is, companies that historically abuse the H-1B visa will opt to hire American workers instead of foreign nationals.
But then there’s everybody else. The average salary of H-1B visa holders, as of 2023, was US$133,000. For a role at this pay rate, it won’t make sense for a company to nearly double its labour cost by hiring a foreign worker. At the same time, it’s not always possible to recruit specialized IT talent domestically – I saw this firsthand consulting for companies in both Canada and the U.S. who struggled to hire IT talent. So what is a company like Amazon (which employs more than 10,000 H-1B visa holders, as of June, 2025) to do?
Hiring more Canadians on TN visas seems like a good substitute for using the H-1B. Canada is one of the most well-educated countries in the world, and many of our aspiring engineers hope to move to the U.S. after graduating anyway. Wouldn’t this aggravate Canada’s “brain drain” problem? Perhaps. Then again, TN visas are temporary. Canadians who move to the U.S. to work through the TN program are thus likely to return.
Additionally, U.S. tech companies might look to settle foreign workers in Canada instead of the U.S. It’s easy to imagine a company like Amazon offering a new software engineer a spot in their Vancouver office as opposed to Silicon Valley, if the job can be done remotely, and doing so would save the company $100,000 per year.
These are the kinds of foreign workers every government wants: highly skilled, high-earning, and hard to replace. America’s competitive advantage has long been its ability to attract exceptional people and give them a path to citizenship. If America no longer wants them, its loss will be Canada’s gain.