Greetings from TechScape! I’m back in the US and busy writing this from the plane. This week’s Tech News revolves around a significant deal involving Donald Trump, which has implications for the high-tech industries in China, the UK, and the US due to unexpected fines on favored visas.

Trump’s Talent Tariff: Visa Fines Threatening the Industry’s Most Valued Employees

Last year, a major tech firm brokered an agreement where tens of millions of dollars went to Trump’s presidential campaign in exchange for favorable policies that foster access to the president and stimulate industry growth. If Elon Musk is included, this figure rises to hundreds of millions. However, Trump’s new fees on frequently utilized visas pose a threat to this arrangement.

My colleague Johanna Bouyan reports:

On Friday, Donald Trump signed a declaration imposing a $100,000 annual fee on H-1B visa applications, which could have significant repercussions for the US tech landscape.

The potential crackdown on H-1B visas has become a central issue for the tech industry. Government data reveals that around two-thirds of H-1B visa employment is tech-related, as employers utilize these visas to attract engineers, educators, and healthcare professionals.

In response to the initial announcements, Amazon, Microsoft, and Google encouraged their overseas staff to return quickly to the US and advised dependents against traveling abroad. The implications of the fines that began at 12 AM on September 21 were uncertain, raising concerns within their HR departments. The White House later clarified that the fees would only apply to new applicants and would not impact existing visa holders with six-figure annual fees. The US Secretary of Commerce reiterated this point. With the camera Fees will be collected on an annual basis.

These penalties are particularly alarming for immigrants from India. Approximately 700,000 H-1B visa holders reside in the US, with 71% originating from India. Chinese nationals make up about 10% to 15% of this group. Additional noteworthy insights: nearly three-quarters of H-1B visa holders are male, earning a median salary of around $120,000. If these penalties survive potential legal challenges, the cost of hiring these workers in the US could become prohibitive for employers.

“Fearing for Our Talent”: India Responds to Trump’s H-1B Visa Fee Increase

These fees serve as tariffs on talent, paralleling Trump’s duties on goods from nearly all US trading partners. The president’s protectionist approach towards professional work resonates like his stance on imports from Vietnam. Additionally, similar to these tariffs, the rationale behind his employee fees is challenging to discern. The US lacks adequate domestic manufacturing capabilities to assemble smartphones fully and will not erect barriers preventing parts made abroad. Likewise, it doesn’t possess a robust pipeline of trained technical workers comparable to those in India and China, creating a talent gap that many leading American companies currently face. Enter H-1B. Advocates of the program, including Elon Musk of Tesla, argue it will address the talent void and attract essential skilled workers to maintain competitiveness. Musk, a US citizen originally from South Africa, once held an H-1B visa himself.

In December, Trump expressed his support for the program.

“I have a lot of H-1B visas for my properties. I support H-1B. I’ve utilized them many times. It’s a valuable program,” said the president. New York Post.

Will Trump’s Talent Tariff catalyze a resurgence of technical manufacturing, prompting the American education system to inspire more students toward technical careers? Perhaps not while he continues to battle against a university system that trains many international students who subsequently obtain H-1B visas and contribute to American companies.

At Last: Trump Finalizes the TikTok Transfer Agreement

Five years later, TikTok faces uncertainty, having dealt with multiple deadline extensions, and Trump claims he has finalized an agreement to transfer TikTok from its parent company in Beijing to US ownership, which is expected to be accepted.

“We have a deal concerning TikTok. A group of major companies is interested in acquiring it,” Trump stated last Tuesday without elaborating.

Since the initial vague announcement, further details have emerged. Trump mentioned in an interview on Fox News Sunday that media mogul Rupert Murdoch and his son Lachlan, CEO of Fox Corporation, might be involved in the deal. Additionally, Michael Dell, founder and CEO of Dell Technologies, is reportedly a part of the discussions.

White House officials revealed that Larry Ellison, who recently lost his Forbes title as the world’s richest man to Elon Musk, would lease and manage TikTok’s algorithm, extending to the management of data collected from American users.

Broader Technology Landscape

Attention Big Spenders: Starmer and Trump’s Multi-Billion Dollar Tech Agreement

Just a week ago, Keir Starmer and Trump announced a commitment from numerous US companies to invest £31 billion in the UK technology sector in the coming years.

Brad Smith, president of Microsoft, hailed it as the “largest announcement” with a commitment of £22 billion over the next four years. Google has also promised to invest £5 billion.

CoreWeave, a US data center company, plans to invest an additional £1.5 billion in the UK, including its site in North Lanarkshire, Scotland. The US software company Salesforce is contributing another $2 billion in the UK.

Nvidia, the leading AI chip manufacturer, has pledged a £11 billion investment in the UK economy as part of this agreement, providing up to 120,000 Blackwell GPUs for projects developed over the coming years in the UK.

A notable critique has suggested that this contract resembles the US’s Stargate project, which promises either $500 million in commitments from high-tech companies or the establishment of the world’s largest data center in Abu Dhabi. The government isn’t obliged to oversee the significant financial transactions. Nvidia announced on Monday that it would invest $100 million in OpenAI, which is more than three times its UK commitment.

Nick Clegg, former UK Deputy Prime Minister and past top policymaker for Meta, criticized the arrangement as a “second-class offer” for the UK in the US technology market.

At a Royal Television Association meeting in Cambridge, Clegg stated that the relationship between the UK and the US tech sectors is heavily lopsided and that the announcement primarily serves US businesses.

He cautioned that the UK risks becoming overly dependent on the US tech industry instead of fostering its own capabilities.

“These companies need these infrastructure resources anyway,” he noted. “They are constructing data centers globally. Perhaps they’ve merely made a token effort to align with the timing of this week’s state visit, but the flow of benefits isn’t mutual.”

“We are technically becoming a kind of vassal state. This is a reality. As soon as our high-tech companies begin to grow in size and ambition, they must turn to California.”

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