America's Unforced Error

The American government just decided to make it $100,000 more expensive to hire a smart person from another country.

For decades, the US had a tool for hiring skilled professionals who help push innovation forward. That tool was the H1-B visa.

The H1-B was the standard tool for hiring “specialty occupations”. That’s a fancy way of saying jobs that require a specific university degree. These include software engineers, biochemists, architects, surgeons, accountants, and data scientists who help form the backbone of the American economy.

The H1-B process has never been a perfect system. It has always been bureaucratic and had an annual cap, which led to a lottery system that made the application process feel more like a game of chance than a rational process.

But for the most part, the system worked. It was one of the only ways to enter the most dynamic ecosystem for innovation in the world.

Yesterday, the United States added even more complexity to the already imperfect system.

The President announced that they would now be requiring employers to pay a $100,000 application fee for every new employee they want to hire from abroad through the H1-B pathway. This fee is due upfront, before the employer even knows if the application will be approved.

You can watch the announcement here:

This isn’t just a simple tweak to the American visa and immigration system, it’s a signal. One that tells companies that it’s going to be more expensive to get access to US markets and build there. This mirrors the broader protectionist sentiment America has already made abundantly clear with tariffs on physical goods, and now it is being applied to human capital.

America’s massive gravitational pull on talent over the past few decades has been fundamental in making America what it is today. Look at the cap tables of the most successful companies in America, they are filled with immigrants.

With this new policy, that pull just got a lot weaker.

Think about it from the perspective of a talented, ambitious, 24-year-old chemical engineer from China. One who dreamed of going to America and is willing to work hard to solve the world’s most difficult problems. The path was somewhat simple: get a job at a US tech company. Now that path is blocked by a huge $100,000 obstacle.

The incentives just became broken. Why would an ambitious and talented engineer choose the path with a massive, expensive, and high stakes lottery when another country is willing to offer a clear path? On the other side of the equation, why would the smaller startups of America try to hire this type of talent? It’s now simply too expensive and risky to do.

This leads to many second-order consequences that I believe will hinder American innovation. The fee acts as a filter, not for talent or ambition, but for the size of the employer’s bank account.

To Google or Microsoft, a $100,000 fee is a rounding error. They can absorb it without too much thought. But for a 10-person startup that pool of talent is no longer accessible.

So what happens? The policy creates a system where only the largest, most entrenched companies can afford to import the best talent from around the world. It gives an enormous, anti-competitive advantage to the very incumbents that new startups are attempting to challenge. It starves the American innovation ecosystem at the root, ensuring that the next generation of brilliant, skilled international workers, are either excluded, or captured by the giants rather than getting a chance to take them on.

So, if we are being objective, why would America choose to do this? Well, as we’ve discussed, some companies are going to be willing to pay the fee.

The current cap is 85,000 visas for the fiscal year of 2025. If we assume the same cap moving forward into 2026, that’s 85,000 x $100,000/application, equating to $8.5B dollars in revenue. That’s not including the non-approved visa applications, so that number will likely skew closer to ~$10B+ in government revenue.

America is favouring short-term gains, and seems willing to ignore the long-term consequences of policy changes such as this one.

For the vast majority of employers, the $100,000 fee to potentially get an applicant approved will be far too much.

This represents a massive opportunity for Canada. Immigration is a politically charged subject across the country, but I believe that Canada should treat America’s unforced error as an opportunity to be seized. These are the exact type of ambitious, and talented people that Canada needs to build forward.

This can help Canada fill the gaps in its tech ecosystem by attracting the global talent that would have previously gone to America. By doing so, a network effect is created. As top innovators arrive, venture capital flows in, and innovative companies are formed. In turn, innovative companies attract more global talent, talent attracts dollars, and the cycle continues.

For America, when you deliberately make your country a harder place for ambitious people to move to, they will, eventually, stop trying. They will go somewhere else. And the things they would have built, the jobs they would have created, and the wealth that would have followed will go with them.

Editors note: 👋 Hey, it’s Sawyer.
Hope you liked this one. I wanted to clarify that many Canadian professionals still have alternative pathways to the US that avoid the $100,000 fee. The most common is the TN visa, which is enabled through the United States-Mexico-Canada Agreement (USMCA). The argument that I’m making is that by attracting a critical mass of top global talent, Canada’s economy strengthens, and better opportunities are created at home.

Since writing this post, the US Press Secretary, Karoline Leavitt, has clarified that the H1-B fee is not applicable to renewals, and the fee is not incurred on an annual basis, it is a one-time fee only for new applications.

I’m working on a few projects that I am excited to share with everyone soon!