US President Donald Trump's "Restriction on Entry of Certain Nonimmigrant Workers" dilutes the relevancy of H1-B visas and has repercussions for attracting foreign students. H1B has been essential to American economic innovation and competitiveness. Instead, students may increasingly choose other economies, like Australia, France, and Germany. The US has opportunities to course correct by revising and strengthening the H1B program, consulting stakeholders, and investing in manufacturing and skill development to retain talent and build a strong domestic industrial base.
The $100,000 fee per new H-1B petition will affect private employers seeking foreign talent, especially in tech and computer-related fields. In FY-2024, employers obtained 255,250 H1-B visas for computer-related fields alone - 64% of the total H1-B visas issued. That year, 283,397 Indians received H1Bs-an astounding 71%.
Indians seeking a US education with work opportunities post-graduation may increasingly consider options such as Australia, France, and Germany, that offer a more attractive picture:
- Australia: Australia's "A New Roadmap for Australia's Economic Engagement with India", outlines plans to leverage India's growing youth population through education, people-to-people exchanges, and recognition of Indian qualifications. The Mobility Arrangement for Talented Early-professionals Scheme (MATES) allows Indian university graduates and early-career professionals in STEM to work temporarily in Australia for up to two years.
- France: France plans to welcome 20,000 Indian students by 2030. The International Classes Scheme, launched by India and France in September 2024, offers Indian students one year of French language study before they begin degree programs. Under the India-France Migration and Mobility Partnership Agreement, France allows Indian students who have a master's degree or complete even a semester in France to obtain a five-year short-stay Schengen visa.
- Germany: India and Germany maintain a Migration and Mobility Partnership Agreement, and the Germans have increased visas for skilled Indian workers to 90,000 (up from 20,000), reduced bureaucratic hurdles in visa applications, and simplified recognition of Indian qualifications. Its new Skilled Immigration Act further facilitates migration with low language requirements and guarantees of family reunification.
The Trump Administration has made tech and manufacturing central to the agenda. This takes time to build, and H1-B visa holders play a role in supporting American innovation. The US must protect its STEM pipeline through better policy, combined with a focus on rebuilding domestic industry. These go hand in hand: employment for Americans and a focus on retaining the best talent from overseas is a balance that must be struck for long-term talent gain.
The US should consider the following options:
- Revise and Review: Section 3(b) mandates that the government re-examine this policy 30 days after the next H-1B lottery to decide whether extending the policy "is in the interests of the United States." That judgment will hinge on two critical questions: whether technology firms continue offshoring jobs to Global Capability Centers and whether American graduates can step into roles requiring urgent hiring. Both outcomes remain uncertain and reducing H1Bs might not increase domestic US hiring.
- Protect American Education: NAFSA found that international students studying in the US contributed $43.8 billion and supported 378,175 jobs during the 2023-2024 academic year. Their outlook for 2025 presents a bleak picture: a loss of $7 billion and 60,000 jobs. If international students are no longer interested in an American education, it will result in a catastrophic financial loss.
- Consult Stakeholders: If the H-1B disadvantages American STEM graduates, as the U.S. argues, then it has a responsibility to design stronger, better alternatives. This requires consultation with industry and higher education to strike the right balance between protecting domestic workers, especially when evidence exists to prove industry misuse of H1B visas, and attracting the world's best - who can help compete in issues such as tech and AI. China's recently announced "K visa" aims to lure global STEM talent. The US cannot afford to fall behind. Replacing the lottery system with a merit-based visa would better serve US interests.
- Invest in Manufacturing and Skills: The government should invest heavily in re-starting domestic manufacturing. For example, theAdvanced Manufacturing Production Credit should be expanded to more critical sectors. Manufacturing relies heavily on skilled labor and will soon involve new tools like AI. To beef up manufacturing, the government needs to invest and subsidize Americans who can contribute to these sectors - otherwise, concerns will remain over losing H1-B workers who can contribute. While tariffs can discourage offshoring, they are no substitute for robust tax credits and incentives, along with stable economic policy.
While the Trump Administration's restrictions on H1-B aim to prioritise American workers, they risk weakening competitiveness in STEM by discouraging foreign students, who go on to contribute to the USs economy. Other countries are creating long-term policies to attract and retain talent, signaling a potential loss to the United States if we fall behind.
[Aryan D'Rozario is an associate fellow for the Chair on India and Emerging Asia Economics at the Center for Strategic and International Studies (CSIS)]
Disclaimer: These are the personal opinions of the author
