Inside Trump’s Chaotic Overhaul of the H-1B Visa

Commerce Secretary Howard Lutnick sowed confusion over whether new fees were annual and applicable to existing visa holders.

WASHINGTON—In the days leading up to his announcement of a new $100,000 fee for H-1B visas, Commerce Secretary Howard Lutnick summoned to the White House a group of President Trump’s allies from anti-immigration groups to sell them on his idea.

President Donald Trump speaks on H1B visa and new Trump Cards as Commerce Secretary Howard Lutnick listens in the Oval Office of the White House,(AP)

Lutnick, who is personally close to Trump, had for months been working on a different pet project: a “gold card” that would provide a data-vars-anchor-text="path to citizenship">path to citizenship to wealthy foreigners willing to pay $1 million.

That idea had been proving unpopular with anti-immigrant groups typically aligned with the Trump administration, who viewed it as a pay-for-play scheme. Lutnick, according to people familiar with the meeting, told them it would reduce immigration overall and brought up another idea: a new, huge fee for the H-1B visa program, a top target of advocates for stricter immigration laws and a popular tool for tech workers. Several attendees perceived it as a fig leaf to help win their support, those people said.

The tacked-on proposal ignited a firestorm across corporate America on Friday, when Lutnick, alongside the president, announced it from the Oval Office. Senior officials at companies who depend on the H-1B visa most heavily, including several Silicon Valley tech giants, said they hadn’t been informed of the coming change.

The announcement set off a 24-hour scramble of tech workers trying to return home, lawyers peppering administration officials with clarification questions, and executives trying to figure out how expensive the change would be. The ordeal also laid bare how the administration is trying to overhaul the immigration system without alienating key parts of the president’s coalition.

“You have a political base that really wants to stick it to the big tech companies. Meanwhile, you have their CEOs writing checks and coming in and out of the Oval Office who are trying to prevent that,” said Nu Wexler, a public-affairs consultant who previously worked at tech companies including Google. “That central tension keeps coming up in this administration.”

The tension between Trump’s desire to boost the tech industry while cracking down on immigration started even before inauguration. In December, the conservative activist Laura Loomer called Trump’s appointment of a top policy adviser on artificial intelligence who had supported removing country caps for green cards “deeply disturbing.”

In the meeting with immigration hard-liners, Lutnick said the new fee on the H-1B visa would be annual—which he stressed standing next to the president during a press conference Friday. The White House later walked that back, saying the new fee would only apply one time to new applicants. Lutnick also told meeting attendees that the administration would discuss “suspending” all other green card categories so the gold card path would represent the only way to immigrate permanently.

But attendees left unimpressed with his pitch.

At one point, one of the attendees flagged that Lutnick’s approach could cut off green cards for spouses of U.S. citizens. Lutnick responded, “Good point,” and made a note, the people said. An official close to Lutnick said he has been talking to tech executives, anti-immigration groups and others about the gold card, H-1B and other programs to understand the topic and get companies to hire more American workers for well-paying jobs.

Steve Bannon, an advocate of stricter immigration laws who was a top adviser to Trump in his first administration, criticized Lutnick for the confusing rollout of the H-1B fees. “These are not tiny details in the document,” Bannon said on his podcast, “War Room,” adding that the secretary “gave not just erroneous information, patently false information.”

Kush Desai, a White House spokesman, defended Lutnick’s approach. “His immense private-sector success makes him an invaluable asset to communicate the president’s priorities and policies to industry and other stakeholder groups,” Desai said.

Lutnick is taking a larger role in immigration policy than other commerce secretaries given his relationship to tech executives and the revenue-raising potential of the visa programs he is promoting.

The H-1B fees overshadowed a different regulation that would supplant the random visa lottery with a process that would give preference to people with higher-paying job offers. U.S. Citizenship and Immigration Services, which oversees the visa program, released a proposed version of that policy Tuesday, though its effects would be minor compared with the $100,000 fee.

Even after the White House said it is a one-time payment, Lutnick has continued to support the fee’s being an annual payment, and administration officials are discussing that option, a person familiar with the matter said.

Executives at big tech companies and industry trade groups said their lawyers and lobbyists were unsure whom to call for clarification on the policy, and they began peppering contacts at the Commerce Department, the National Economic Council, Citizenship and Immigration Services and the Office of Science and Technology Policy with questions.

OSTP officials who work on tech policy and officials close to the AI czar, David Sacks, weren’t involved in the change, people familiar with the process said.

One trade group executive heard from dozens of companies throughout the weekend, a pace the executive described as more than at any other point in Trump’s second term, including April, when he introduced wide-ranging tariffs.

The panicked texts continued Saturday until the White House clarified matters in the afternoon, blaming the confusion on “lawyers and others with agendas.”

Even though the immediate storm has calmed, many workers are worried about further challenges to high-skilled immigration if it can be used as a bargaining chip.

Trump received a custom piece of glass with a gold base from Apple CEO Tim Cook last month.

“I’ve seen better organized riots,” said Rep. Sam Liccardo (D., Calif.), who represents Silicon Valley. Liccardo’s phone was lighting up Friday and Saturday, with anxious executives at small tech companies worried about how the changes would affect them.

“No amount of gold trinkets can change the volume of grumbling I’m hearing from Silicon Valley,” Liccardo said, referring to Apple Chief Executive Tim Cook, who gave Trump a custom piece of glass on a 24-karat gold base last month.

Write to Michelle Hackman at michelle.hackman@wsj.com, Tarini Parti at tarini.parti@wsj.com and Amrith Ramkumar at amrith.ramkumar@wsj.com