What the $100K H-1B Visa Fee Means for Big Tech + TikTok Deal Details Emerge

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1:28So update on Dave. It's up to you. We'll take the laundry. Rinse. It's time to be great. Today's number, 95. That's how many dollars it costs to get a personalized video message from Nigel Farage on Cameo. The British politician made$180 ,000 on Cameo last year. That makes him the first politician in history to openly admit what his job actually is, specifically saying anything for money.

2:11Welcome to Prof G Markets. I'm Ed Elson. It is September 23rd. Let's check in on yesterday's market vitals. A tech-driven rally pushed the major indices to record closing highs. Nvidia led the way, climbing 4 % on plans to invest$100 billion in OpenAI. The dollar fell, breaking a three-day rally. Meanwhile, gold reached another record. And finally, BYD shares dropped 4 % on news that Berkshire Hathaway has fully exited its stake in the Chinese electric vehicle maker. OK, what else is happening? President Trump announced a big change to the H-1B visa program, specifically an entry fee. In order to attain an H-1B to live and work in America, you must now pay $100 ,000.

3:01To put that into perspective, the fee to enter the H-1B lottery used to be$5 ,000. That lottery will now be replaced by a, quote, weighted selection process that favors the highest paid positions. In sum, we are about to see a huge decline in H-1B workers. Now, a quick reminder, what is the H-1B visa? Well, this is a program that goes back to the H.W. Bush administration. It was designed to attract highly skilled workers, people with specialty knowledge, engineers, software developers, computer scientists. And the idea was to bring the world's best and brightest into the country and have them build value for American companies versus foreign companies.

3:46And indeed, that is exactly what happened. Some of our greatest entrepreneurs, our greatest business people came to the US on the H-1B. People like Satya Nadella, the CEO of Microsoft, or Sundar Pichai, the CEO of Google, Jeffrey Skull, the president of eBay, and most notably, Elon Musk, the CEO of Tesla. Yes, Elon was able to stay in America thanks to and H-1B. Without it, we wouldn't have Tesla or SpaceX or Neuralink, or at least they wouldn't exist in the US. And in fact, Elon has recognized this fact. Just last year, he wrote, quote, the reason I'm in America, along with so many critical people who built SpaceX, Tesla, and hundreds of other companies that made America strong, is because of the H-1B.

4:36Quote, I will go to war on this issue, the likes of which you cannot possibly comprehend. Well, I guess he did go to war. He donated nearly$300 million to the Trump campaign, but it turned out to be more of a war against himself. The H-1B hasn't been eliminated per se, but it has definitely been put way out of reach for many, many workers. After this change, H-1B issuance is expected to plummet this year. And that makes sense, considering the average H-1B worker earns about $94 ,000 a year, which is less than the entry fee you'd have to pay to even make that salary in the first place. Now, why is Trump doing this?

5:17Well, the idea is to encourage companies to hire American workers instead of foreign workers. And that is fair enough. But we should also note that this is quite a reversal from Trump's previous position on skilled immigration, which he promoted throughout the campaign. One of his promises, for example, was to give a green card to every foreign student who graduates from an American college. This is a clip from an interview on the All In podcast. We need high-skilled workers in this country. Yes. We need to recruit the best and brightest from the world. I agree. Can you please promise us you will give us more ability to import the best and brightest around the world to America?

6:02I do promise, but I happen to agree. That's why I promise. Otherwise, I wouldn't promise. It's so sad when we lose people from Harvard, MIT, from the greatest schools and lesser schools that are phenomenal schools also. And what I wanted to do, and I would have done this, but then we had to solve the COVID problem because that came in and, you know, sort of dominated for a little while, as you perhaps know. But what I want to do and what I will do is you graduate from a college. I think you should get automatically as part of your diploma a green card to be able to stay in this country. And that includes junior colleges, too.

6:34Anybody graduates from a college, you go in there for two years or four years. If you graduate or you get a doctorate degree from a college, you should be able to stay in this country. And you know more stories than I do. But I know of stories where people graduated from a top college or from a college and they desperately wanted to stay here. They had a plan for a company, a concept, and they can't. They go back to India. They go back to China. They do the same basic company in those places, and they become multi-billionaires employing thousands and thousands of people, and it could have been done here.

7:03That was in June 2024, so before the election. And here we are a little over a year later. Not only has that position been abandoned, it has also essentially been reversed with this H-1B move. So what does this mean for our economy? What does it mean for tech, which is, of course, highly reliant on foreign skilled work? Well, here to help us answer that, we have Peter Harrell from the Carnegie Endowment for International Peace. He also served in the National Security Council and the National Economic Council under President Biden.

7:42OK, Peter Harrell, thank you for joining me on the program. Ed, it's great to be on. So, Trump has issued this new entry fee. If you want to get an H-1B, you got to pay$100 ,000. A lot of implications for the economy, especially for big tech. But first, I just want to get your initial reactions. What are kind of your initial thoughts? What are the implications of this move? Yeah, so this is a big move out of the administration. Obviously, the administration has taken a tough on immigration set of policies across the board, but this is really the first time they seem to be moving against sort of high-skill immigration as opposed to more blue-collar kind of immigration, people crossing the border.

8:28It is clearly going to have implications for the tech sector. The tech sector is the biggest user of these visas, which basically let people with higher skilled professional qualifications come to the U.S. for between one and six years to work in specialty fields. Clearly going to have implications for the tech sector, but that's not the only sector that this is going to hit. Although we think about H-1Bs as being some of the big tech platform companies as well as startups. Elon Musk was famously an H-1B early in his career when he was getting some of his early companies started. It is also used by doctors, hospitals to bring, you know, specialty doctors in.

9:15It's used by universities and nonprofits to bring policy researchers and academic researchers into the United States. Well, it's probably over half a tech story. It's by no means only a tech story for employers here in the United States. I just want to read you a quote from Reed Hastings, who's, of course, the founder of Netflix, who actually supported this move. He said, quote, I've worked on H-1B politics for 30 years. Trump's$100 ,000 per year tax is a great solution. It will mean H-1B is used just for very high value jobs, which will mean no lottery needed and more certainty for those jobs.

9:56What are your reactions to his view that this is actually a good thing? What is the economic argument as to why putting on this$100 ,000 entry fee would actually be good for companies, for tech companies and for the economy? Yeah, so I think there are a couple of arguments in favor of this move. And I should begin by saying, you know, watching the Trump administration over the last, what are we, eight months, nine months now, Ed, I think this is probably in some sense a move that was driven by A, Trump being tough on immigration, and B, this is a president who shows he wants to look for money wherever he can find it, right?

10:33And this is a chance for him to get some additional revenue for the U.S. government. So that's probably what's driving this. But what are the kind of positive policy rationales potentially for this move or what are the potential upsides? Well, the first is, although the H-1B program started back in the early 1990s, was intended to bring a diverse range of high-skill workers to the United States, there is some evidence. And this is, I think, what Mr. Hastings is talking about. There is some evidence that over the last decade or so, a handful of relatively large tech companies has figured out how to run the system in a way that benefits them.

11:17So if you look at the list of who the largest users of H-1B visas are, you know, it is a couple of the big tech platform companies like Amazon. And then it's a couple of the Indian IT outsourcing companies that have used this to get workers to come to the U.S. And so, you know, there are a number of these companies that are getting several thousand of these visas per year each. And so I think there is an argument that for the tech users of this visa, extracting a fee from them will probably force them to focus their hiring under H-1B on higher value employees rather than on kind of middle value employees.

12:04And I see the argument there for that. Now, that is not an argument for the NGO users, the small business users, the kind of non-big tech platform users who I think will find a$100 ,000 fee makes the difference between their ability to bring in talent that they want to bring in and their ability to bring that talent in or not. I think the hospital, this is a major issue for them. Maybe less of an issue for Amazon or Infosys, which may decide they eat some of the fee here. We'll see. Yeah, I mean, it goes back to why do we have the H-1B in the first place? And the whole idea is it's to make us competitive, competitive in technology and engineering, competitive in all of the highly skilled work sectors.

12:55But, you know, we're in the middle of this AI race, especially with China. And you compare this to Trump's stance basically just a year ago, where he seemed to be very pro-skilled immigration. There was at one point, he was saying that he wanted to give green cards to any foreign student who graduated from a US university. it appeared that it was his view that in order to be competitive in technology, we need to do whatever we can to attract as much skilled talent as we can from abroad. And it appears that this is going to reverse that, or at least that's how it appears on its face. I'm just wondering what you think of that.

13:35Is this going to hamper our ability to compete on AI and in technology at large? Well, so it probably is and it isn't. You know, it probably is not going to hamper meta platforms ability to bring in an engineer it wants to bring in because, you know, we've seen the reports that Zuck is spending, what,$100 million to buy an engineer an extra 100K for the visa probably isn't going to be dispositive to what Zuck wants to do. But where I think it will be harmful, will be on more of the, you know, upstart AI companies, more companies that are trying to get their feet off the ground, who already find this H-1B system to be extremely complicated to navigate, and who now are going to have to come up with$100 ,000 of cash on top of all that complexity and legal fees.

14:30And so I think in a way what you're going to see is a system that, you know, some of the existing big tech guys will be kind of, okay, fine. We'll bring in a couple of people we really want to bring in. We'll eat the cost. We may not bring in some of the mid-skill, lower, you know, mid-skill people we otherwise would have brought in. But I do worry the real losers here are going to be the, you know, startups, the folks who were bringing in, you know, Elon when Elon was a kid for whom this is real money. And that, of course, has historically been a big part of American innovation. And the administration's going to need to think about that part of the ecosystem if they don't want to cede our innovative edge to our competitors.

15:13Yes. One really interesting stat here that I did not realize, but three quarters of H-1B workers are from India. It used to be kind of more diverse, more balanced a while ago, but it's now 75 % will bring in people from India. I'm just wondering, to what extent does this affect our relationship with India? And given what we've seen in terms of these tensions, especially with tariffs over the past few weeks, I wonder if it's possible that this is really targeted at India in some way. Does this affect our relationship with the nation? So it certainly has affected our relationship in the sense that we saw Indian markets get a little bit rattled after this announcement.

15:58We've seen obviously concern out of Indian political leadership. You know, I'll be very interested to see whether this issue plays into the U.S.-India trade negotiations. And I have no inside information as to whether that's happening. But one thought I did have when I saw this news breaking on Friday and through the weekend was, you know, there's a provision buried in the executive order that basically says, yes, we're having this$100 ,000 cap or this$100 ,000 fee. But the Secretary of Homeland Security can waive that fee for classes of immigrants or for individual immigrants or for firms if the Secretary decides that she wants to.

16:46And one thought I had is, you know, would the Trump administration tell the Indians as part of the trade negotiations, you know, hey, we'll give you 20 ,000 free H-1Bs if we get to yes on the trade deals. Again, I have no inside information on that, but that is an option they seem to have legally given themselves, given this kind of broad exception they have created for the broad potential exception they've created for themselves. But it is clearly going to be an issue in the U.S.-India relationship. I just want to get your view on the impetus for this. As I mentioned earlier, a year ago, he seemed to have almost the opposite stance on this issue of skilled immigration.

17:29And now it appears to be reversing. I'm wondering, what is the reason for this? Why have they pursued this strategy? What is it hoping to accomplish? who's in his ear or perhaps he came up with this on his own. But why do you think he is doing this when you get down to it? Well, I think that this combines two things we know Trump is interested in. One is a tough line on immigration, right? This just lets him look tough on immigration, where he can say previously was free or not really free, but a few thousand dollars. Now it's$100 ,000. So I think he likes the messaging of toughness, even if there are some policy downsides.

18:15And second, I do think it's about the money. You know, this is a guy we see, whether it is the NVIDIA rev share deal for chip sales to China, or whether it is taking, you know, equity in Intel. This is a guy who's looking for kind of odd sources of government revenue somewhere. And I think this was kind of a, you know, an issue that let him combine both both those interests. He can appear tough on immigration and he can claim he's getting money for the federal government. And I don't think you have to overthink that with this particular president. Yeah. The other thing we saw is this rollout of the gold card visa program.

18:52You can now pay a million dollars to live in the U.S. Just wondering if you had any reactions to that move and perhaps what the economic implications of that program will be. I mean, we'll have to see the economic implications of that program, but I do, the fact that he announced the Trump gold card and the H-1B reform or the H-1B fee on the same day, you're reinforced in my mind that the money was a piece of this H-1B policy, right? I mean, he's looking for ways to raise money through immigration. So the gold card basically is, you know, an expedited visa green card for high net worth individuals coming to the U.S.

19:35who are willing to pay a million dollars. We've previously had policies where immigrants who are investing a lot of money here in the U.S. So it's not conceptually all that different from the past, except A, named after the president. B, the money is being paid to the government rather than being invested in communities in the United States. And C, you know, really just seems to be a visa for sale kind of system that we've often criticized other governments, other governments for adopting. Whether it works, I think we'll just have to see what the demand is. I mean, you know, Trump says we might do 80 ,000 of these a year, I think is what he said.

20:18I'll have to see if there's demand for that out there. All right. Peter Harrell, really appreciate your time. Thank you for joining us on the show. Thank you so much for having me on, Ed. After the break, an inside look at the latest developments at TikTok. If you're enjoying the show, give Prof G Markets a follow.

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23:19We're back with ProfG Markets. The White House has unveiled new details on the TikTok deal. The deal is completely finalized, according to White House Press Secretary Caroline Levitt. Oracle will oversee the retraining of the app's algorithm, which it will lease from ByteDance. Meanwhile, over the weekend, Trump said that Michael Dell and the Murdoch family could take part in the deal. As we covered previously, a group of American investors will own roughly 80 % of the new entity, as well as hold six out of seven of the board seats. That leaves ByteDance with less than 20 % of the equity in the new business.

23:58Okay, for an inside look at these developments, our producer Claire Miller spoke with Dan Primack, business editor at Axios and author of the daily Axios Pro Rata newsletter. He has been in touch with a senior White House official, and he's also been in touch with someone who was personally involved in this deal. Let's start with the core issue of the algorithm. Last week, there was talk of licensing it from ByteDance. Now there's talk of leasing a copy of it and that Oracle will secure it somehow. Seems like a lot of semantics. What is going on with the algorithm from your understanding? Yeah, so there's going to be what they're calling a lease.

24:38So basically, a copy of the TikTok algorithm will get made. ByteDance will retain the original algorithm. That copy will go to what they're calling TikTok US, which is going to be controlled by Silver Lake and Oracle and Andreessen Horowitz and other US investors. And at that point, that copy, they're going to be able to retrain and also continue to modify it. And the best way I can kind of describe this is imagine someone made a drawing and made a photocopy for you. They would hold on to the original drawing, but you could do whatever you want with the photocopy. You could draw additional things.

25:06You could fold it. You could change the color, et cetera, and that would be yours. And the reason for this arrangement is basically that ByteDance is going to continue to operate TikTok in countries outside of the U.S., so it still needs access to the algorithm as well. So what is Oracle's role here? oracle is basically the tech partner and this isn't new you know trump tried to ban tiktok during at the end of his first term at which point oracle popped up as the tech partner and even after that the beginning of the biden administration oracle was working with tiktok on something called project texas oracle basically is two things it's the tech partner it's the one that's going to retrain the algorithm it's the one that provides the data security you basically sit on oracle cloud and then also oracle is going to be an equity investor in tiktok us one of the three managing partners, I guess you could say, of this new company.

25:54All of this new information has been coming from the White House. Has Beijing weighed in here? Because last week, it seemed like China was basically saying ByteDance would hold on to the algorithm and license it. It seems like they were not on the same page going into that phone call with Trump. I don't know how much distinction between the term license and lease there really is. I think it's a similar sort of thing. The official readout from the Chinese government was a lot more vague or at least a little bit more circumspect. And what's unknown is, is that because there actually is some daylight between the two, or was that a bit of an attempt to save face by the Chinese government?

26:31The White House, you know, granted, they have made promises in the past on things that haven't come to fruition, but they've been pretty consistent on this for the past several days. China, during the meeting in Madrid, approved of this during a call with Trump and Xi. they signed off and that there's going to be actual paperwork signed shortly. I wanted to ask about that. Is this really a framework or is there a deal? Your sense is there is actual paperwork and a signature is incoming? I think there's probably two parts. There's probably some sort of memorandum of understanding, which would be the framework and then the actual all the details have to get finalized.