This post has been updated to include a statement from the National Association of Software and Services Companies, which represents Indian IT outsourcing firms.
President Trump plans to sign an executive order in Wisconsin on Tuesday that the White House says will make it harder for tech companies to replace American workers with cheaper foreign labor, and will strengthen rules barring foreign contractors from bidding on government projects, according to senior administration officials.
The officials, in a background call with reporters, said Trump will direct the Departments of Labor, Justice, State and Homeland Security to crack down on fraud and abuse in guest-worker programs by issuing new immigration rules.
The president will also direct the Department of Commerce to review federal procurement rules and trade agreements with a view to putting American firms at an advantage when it comes to winning contracts.
The officials pitched the twin directives as benefiting working- and middle-class Americans who have suffered for too long under unfair trade and immigration rules.
“This is the policy that ensures no one gets left behind in America anymore — that we protect our industry from unfair competition, favor the products produced by our fellow citizens and make certain that when jobs open those jobs are given to American workers first,” the White House said in a statement.
It was not immediately clear how much the administration could accomplish without cooperation from Congress.
“Sweeping changes are going to require congressional action,” said Lynden Melmed, an immigration attorney who had served as U.S. Citizenship and Immigration Services chief counsel within the Department of Homeland Security under President George W. Bush.
However, industry experts said Trump’s executive order was a good first step to protecting the U.S. defense industrial base, and U.S. firms that do business with the federal government.
“It’s one of the few presidential exertions in recent time, that holds out the hope of saving U.S. industrial jobs,” said Loren Thompson, a defense industry consultant and the chief operating officer of the Lexington Institute in Arlington.
Although Trump vacillated on the question of whether he supported the H-1B visa program as a candidate, he said repeatedly that he wanted American firms and American workers to carry out federal projects. The executive order prepares to make good on that promise after a series of reversals by the new president on essential questions of international economic policy.
On Friday, Trump’s treasury secretary declined to officially accuse China of manipulating its currency, which Trump had pledged to do on his first day in office. A draft of a letter from the administration to Congress obtained by The Washington Post and other media organizations last month called for only minor changes to the North American Free Trade Agreement, which the president once declared “the worst trade deal maybe ever.”
Yet supporters of a more protectionist procurement policy were not yet prepared to declare victory.
“We’re encouraged that this is an important first step. It essentially means the president is turning his words into action,” said Scott Boos, a senior vice president at the Alliance for American Manufacturing. He added, though, that “the true test” would come after the administration had completed its reviews and begun to propose new policies.
White House officials singled out the H-1B visa for “high-skilled” foreigners in the science and engineering industries as the priority for reform, but said a comprehensive review could lead to changes in other guest worker programs, including visas Trump’s own company uses for foreign workers at his hotels, golf courses and vineyard.
Trump, who campaigned on an “America First” ideology, had promised to “end forever the use of the H-1B as a cheap labor program.”
His executive order would require the agencies to perform administrative reviews immediately and propose reforms to ensure that the H-1B visas are awarded to the most skilled and highest paid workers, officials said.
The officials said reform could first come through administrative changes, such as raising the visa application fees, adjusting the wage scale to more accurately reflect prevailing salaries in the tech industry, and more vigorously enforcing violations. It could also change the lottery system to give foreigners with U.S. master’s degrees a leg up.
The current worker visa program has been diluted as rules have gone unenforced, the officials said.
Indian outsourcing firms such as Infosys, Tata Consultancy Services and Wipro receive the lion’s share of the visas because they submit tens of thousands of applications to increase their chances.
Rentala Chandrashekhar, president of the National Association of Software and Services Companies, which represents Indian IT outsourcing firms, said Tuesday that the companies support Trump's efforts to root out abuses in the H-1B system but cautioned that "onerous additional restrictions" on work visas would "hurt thousands of U.S. businesses and their efforts to be more competitive by hindering access to needed talent."
"The executive order is another harbinger of more aggressive oversight and enforcement of the H-1B program," Chandrashekhar said in a written statement.
Mike Emmons, a software developer in Longwood, Fla., who was let go from Siemens ICN after training his foreign replacement in 2002, applauded Trump’s executive order.
“It was the most depressing thing I've ever been through — having to train people to do my job, only so I could get laid off,” said Emmons, 55, who now works for a Florida state agency. “After watching this for 14 years, what Trump is doing is a thousandfold better than what Bush did, or Obama or what Hillary would have done. He’s doing something for us.”
Some advocates for H-1B visa reform cautioned against making rash changes without considering the ripple effect on the nation’s green card system or employers at large.
“There are a handful of companies that have stirred controversy in this space but there are 27,000 other employers that still have to use this system,” said Scott Corley, executive director of Compete America, a coalition of mostly tech companies advocating for immigration reform to benefit high-skilled foreign workers. “If you basically go in and take a sledgehammer to the program without any thought for collateral damage, the cure can be worse than the ailment. Change needs to come. It comes down to how you do it.”
Melmed, who also serves as counsel for Compete America, said the law does not give Trump much wiggle room to make meaningful change without Congress — though it could tip the scale in favor of foreign workers who hold advanced degrees from U.S. universities.
“It is no secret who the president is going after,” Melmed said, referring to the giant outsourcing firms. “Companies that pay low wages are going to face a difficult few years.”
Ron Hira, a research associate with the Economic Policy Institute and an H-1B visa expert who teaches public policy at Howard University, called Trump’s executive order a “step in the right direction” but it remains to be seen whether it “dislodges the stalemate that’s in Congress right now.”
On Monday the U.S. Citizenship and Immigration Services announced that it received 199,000 petitions for 85,000 slots during this year’s H-1B visa lottery. Last year, the agency received 236,000 applications.
The president will also order a review of existing federal procurement policies. These are statutes and rules instituted over the decades that may bar foreign contractors from bidding for jobs, exclude certain raw materials from abroad, or mandate that international firms deliver projects at reduced prices relative to American firms to win contracts.
The administration will also review exceptions to these policies granted under free-trade agreements and the World Trade Organization. While these agreements are designed to give U.S. firms access to foreign governments’ contracts in exchange for allowing firms from abroad to bid on federal projects, a senior administration official argued that U.S. bids are treated unfairly overseas.
The administration official cited a Government Accountability Office report from February finding that foreign governments opened fewer bids to American firms than the federal government opens to international firms. But the report also noted that data on procurement from around the world is unreliable and incomplete, and U.S. firms may have more success than foreign competitors in winning bids that are open to global competition.
Jeffry J. Schott of the Peterson Institute for International Economics in Washington argues that opening federal procurement to international contractors had worked to the advantage of U.S. industry. This is because American firms have been able to take advantage of the opportunities they received from abroad in return — especially, for example, in supplying components to Japanese monopolies.
The order will also limit the use of waivers to Trump’s “Buy American” policies and allow agencies to penalize contractors that rely on raw materials from abroad that are unfairly subsidized by foreign governments.
Finally, Trump’s order will affirm the government’s commitment to standards for determining what counts as U.S. steel for purposes of procurement. The official argued that ensuring steel used in federal projects is both melted and poured, and not just finished, in the United States will protect American mills and steelworkers.
“It’s just, boom — this is what America wants, and the president intends to give ‘Buy American, Hire American’ to the American people,” the official said.
Other experts were more skeptical. “I think U.S. firms probably sell a lot more to the Mexican government — supply Mexican government contracts — much more than Mexican firms supply U.S. government contracts,” Schott said.