Trump’s Bait and Switch on H1B and Gold Visas
Trump’s commerce secretary, Howard Lutnick, announced an executive order that there will be an annual fee of 100k for H1B visas. As a Trump skeptic, initially it seemed as if Trump had come through on immigration reform. However, the White House issued a press release clarifying that the executive order will only be a one time fee and only apply to new H1B visas, thus not applicable to existing holders. Like with the tariffs, Trump proposes something grandiose and then goes taco, which I suppose is just his art of the deal.
While the annual fee for all H1B visas would practically shutdown the program, the revised executive order will have a more minimal effect. This might impact startups and outsourcing firms like Tata and Infosys while having a minimal impact on magnificent 7 companies like Meta, Alphabet, Apple, and Nvidia. These companies give that much, if not more, to their workers in stock portfolios, thus a one time fee is nothing for them.
source: @ViralVolT1 on X
While the H1B executive order is still a net positive by itself, Trump’s gold visas for wealthy foreigners, who can cough up $1 Million, may offset any benefits. For instance, a corporation can pay $1 million for a highly sought after AI specialist. Not to mention Trump’s DHS also proposed a higher wage cap for H1B’s. Basically, this promise to protect the middle class is at the expense of changing the demographic composition of the upper class.
The gold visas could lead to a lot of wealthy Chinese buying up California’s real estate. Trump and MAGA Inc. hate California, especially the Bay Area, and cosmopolitan coastal Whites in general, because they view that demographic as the intellectual powerhouse behind liberalism. Thus, they are fine with California being colonized by Chinese oligarchs. The idea of selling US citizenship cheapens what it means to be a US citizen, though it could work out as long as there are strict country caps. Also, since the US bond market is vulnerable, the Trump admin is hoping that the revenue from the gold visas can save the bond market.
The best explanation is that Trump is trying to simultaneously appease both his nationalist base and Silicon Valley backers, who have recently shifted to the right. During the election, Trump went on the All-In podcast, which is hosted by Silicon Valley billionaires, and promised that he would stamp a greencard on every college diploma. Silicon Valley are pressuring Trump that if they don’t get their way, the AI bubble will burst, leading to an economic crash, thus a blue wave in the midterms. Due to its sheer size and market concentration, an AI bubble burst could cause a stock market crash much worse than 2008 and more akin to 1929 and the Great Depression. Not to mention, concerns that winning the AI race against China may be the only way to save the US world reserve currency status, due to the massive deficit.
Regardless of what Trump’s does about H1B policy, the future of Silicon Valley is not more H1Bs but rather a combination of automation and outsourcing. Indian tech workers can live like kings by taking a remote job in India, thus there is limited appeal to having to share a small apartment with a lot of other H1Bs in the Bay Area. There has also been hype about Canada and the UK trying to scoop up America’s H1B’s. Despite China being an ethnostate, it may try to brain drain their rival India.
While we need immigrants for certain economic roles for the time being, future automation will mean that the economy can function with a much smaller workforce. AI will transform Silicon Valley to a much smaller, albeit more highly skilled workforce. Regardless, when the Democrats get back in power, they will ramp up immigration for demographic and political reasons, even if there is no economic necessity. Trump has a narrow window to accomplish reform on immigration, so he can’t screw around and half ass stuff. Immigration policy is the only card left that Trump has to maintain legitimacy and salvage his legacy.
https://robertstark.substack.com/p/trumps-bait-and-switch-on-h1b-visas