MC EXPLAINER H-1B clash, round three: Why America won’t quit the H-1B fight and how Trump’s $100k fee raises the stakes

President Donald Trump’s latest proclamation, slapping a $100,000 annual fee per H-1B visa, has turned the program into the centre of a fresh storm.

Every few years, the H-1B visa is back in the headlines, either as a saviour of Silicon Valley or a villain stealing American jobs. US President Donald Trump’s latest proclamation, slapping a $100,000 annual fee per H-1B visa, has turned the program into the centre of a fresh storm.

This isn’t the first time. In 2010, Congress raised H-1B fees to pay for US border security. In 2017, Trump’s first term launched the 'Buy American, Hire American' order, tightening scrutiny. Each time, Indian IT firms and US tech giants absorbed the shock, adjusted, and moved on. But a six-figure annual fee? That’s a whole new ballgame.

Why H-1B keeps landing in the crosshairs

1. Jobs vs skills paradox

American lawmakers accuse firms of importing workers who take away jobs from locals. US Senate Judiciary Committee, 2017 hearing on H-1B visas said, “The program was never meant to replace American workers, but that’s what it has become.” Trump’s 2017 “Buy American, Hire American” order explicitly stated H-1B was being used to 'replace American workers' and called for prioritising 'the most-skilled or highest-paid' applicants.

Companies counter that they need H-1Bs for specialised roles they can’t fill domestically, AI engineers, chip designers, healthcare specialists. TechNet (US tech industry lobbying group), in 2017, had said, “The H-1B visa program helps ensure employers can hire the highly skilled workers they need when American workers are not available.”

US Chamber of Commerce argues H-1Bs are critical for fields like AI, semiconductors, and healthcare, noting shortages in advanced STEM fields. American Immigration Council (fact sheet, 2022) cites USCIS data showing that H-1B recipients are overwhelmingly in computer-related occupations, engineering, and healthcare roles consistently flagged as shortage areas.

Both arguments have merit, which keeps the fight alive.

2. Wages under the scanner

A 2017 NBER study found that while consumers and firms benefited from cheaper tech labour, native computer scientists saw wage pressure. On the other hand, US immigration data shows the median H-1B salary in 2021 was over $108,000, well above the U.S. median wage. This wage debate ensures the program is never out of politics.

3. Outsourcing and 'body shops'

Indian IT services firms, often called 'body shops' by critics, have been accused of gaming the system by filing mass visa petitions and leasing workers to client sites, according to a report by The Guardian. Government audits and watchdog reports have flagged loopholes and weak enforcement. It feeds the perception that H-1B isn’t always about top-tier talent.

4. Immigration politics

H-1B is legal, temporary, and skills-based. Coverage by Reuters and The New Yorker shows in US political discourse, it gets lumped in with broader immigration fights, making it an easy populist target whenever jobs, borders, and globalisation collide.

5. Election-season punching bag

From Obama to Trump, every White House has found H-1B useful to signal toughness on outsourcing while still keeping corporate America happy. That’s why the visa becomes front-page news before almost every election.

History rhymes, but not quite

• 2010: Congress imposed a $2,000–$2,250 surcharge on heavy users of H-1B and L-1 visas. India protested at the WTO. Indian IT firms absorbed the cost, about $200 million annually, but carried on.
• 2015: The surcharge doubled to $4,000–$4,500. Again, margins took a hit, but the model survived.
• 2017: Trump’s 'Buy American, Hire American' order led to record visa rejections and delays. Indian IT firms responded by hiring more Americans and expanding offshore delivery. Infosys and TCS both ramped up US hiring to de-risk, as per an Axios report.

The legal landmine

Here’s where it gets tricky. Reuters and The Washington Post both note that the proclamation is on shaky legal ground. Past H-1B fees were imposed by Congress through statute, not by executive fiat. Constitutional scholars, cited by Associated Press, argue that only Congress has the power to levy such fees, which look more like taxes than regulatory charges. Industry groups like the US Chamber of Commerce have successfully challenged restrictive visa rules before. Lawsuits are expected, and courts may have the final say.

What India stands to gain

Ironically, while US tech firms take the hit, India could benefit. Senior officials in New Delhi have already pointed out that the move will accelerate the growth of Global Capability Centres (GCCs) in Bengaluru, Hyderabad, Pune, and Gurugram.

Former NITI Aayog CEO Amitabh Kant commented that the move will redirect global brains to India’s tech hubs, enhancing innovation and growth in the country.

“With close to 1,600 GCCs of multinational companies in various sectors … India has become … what China is for tech hardware. … If the US walks the talk on H-1B visas, chances are that the losses to Indian IT companies could be potential gains for GCCs,” a senior IT Ministry official told Indian Express.

Former Infosys CFO and industry veteran Mohandas Pai has warned that the US decision to impose a steep $100,000 annual fee on H-1B visa applicants could dampen fresh demand from companies and accelerate offshoring in the coming months.

Companies unable to bring talent into the US may simply build larger hubs in India to serve global operations remotely.

That’s the paradox: a policy pitched as protecting American jobs could end up pushing more work offshore.

H-1B is controversial because it sits at the fault line of jobs, wages, and politics. Every decade or so, Washington rewrites the rules. and every time, Indian IT and U.S. tech giants scramble to adapt. The difference this time is scale: a $100,000 fee risks turning the program from a cost of doing business into a deal-breaker.