President Trump’s imposition of a $100,000 application fee for H-1B visas, the visas that enable US employers to hire skilled foreign workers in specialty occupations, is the latest evidence of his war on innovation. Trump’s justification for this fee is to make it easier for Americans to get jobs that foreign workers are allegedly taking. Of course, this justification is absurd because no country, even America, has an excess supply of smart, skilled, hardworking people who can quickly add value to an organization—let alone a country. Indeed, immigrants tend to contribute a disproportionate share of US inventions and aggregate innovation.
Although Trump has launched several wars on government policies and members of society, his war on innovation is the most damaging to Americans’ material quality of life because innovations lead to technological advance, the leading source of economic growth. People who live in an innovative and productive economy tend to be more content with their lives and focused on achieving a bright future. However, by impeding innovation and fomenting discontent, Trump is better able to cultivate grievances that enable him to convince his supporters that he is fighting for them against targeted causes of economic malaise, including foreign countries that allegedly rip off America, illegal and even legal immigrants, minorities, and Democrats.
Trump’s actions have curtailed innovation in at least five important ways. First, Trump has not fostered a climate of innovation in the private sector where most innovation originates. Instead, he and his toadies in various government departments have signaled that private organizations better “stay in line,” discouraging them from creating incremental or disruptive innovations for fear of incurring Trump’s retribution.
Thus, for starters, private law firms, a chipmaker, universities, and media companies are showing their fealty to Trump by effectively transferring significant value to the federal government, some of which could otherwise be used to help fund innovations. The government has even threatened Harvard University that it may use so-called "march-in rights" under the Bayh-Dole Act, which would allow it to take control of or re-license Harvard’s valuable patents. And the Trump administration has raised the possibility of taxing private universities’ endowments and eliminating their tax-exempt status, which would significantly reduce their ability to invest in education and research leading to innovation.
Second, by being the largest single funder of university-based research, particularly in science, technology, engineering, and medicine, the federal government helps to drive innovation that benefits the nation and the world. Key government agencies involved include the National Science Foundation, National Institutes of Health, Department of Defense, Department of Energy, and NASA. All of those agencies, however, have been the focus of broad-brush funding cuts by the Department of Government Efficiency (DOGE) without DOGE proposing specific reforms to improve the efficiency of government funding to promote innovation.
Third, by raising import prices, Trump’s tariffs on goods from foreign countries have weakened competition by foreign firms that has incentivized US firms to innovate. For example, during the 1980s, US automobile firms were strongly incentivized by competition from Japanese automakers to improve the quality of their vehicles. Chinese electric vehicle producers, which led by BYD Auto collectively possess the largest market share of electric vehicles in the world, could incentivize US EV producers to become more innovative. But high tariffs and stringent regulations combine to create significant barriers for Chinese producers aiming to sell electric vehicles in the United States.
Fourth, Trump’s continuation of price and entry regulations in various industries prevents them from becoming significantly more competitive and innovative, as was shown by the effects of industry deregulation in the 1980s and 1990s. Viable targets for deregulation that could spur innovation include international airline and ocean transportation services, taxi companies, and various occupations, such as the legal profession, where new lawyers are limited by occupational licensing. Instead of extracting free services from private law firms, Trump should deregulate the legal profession, which would lead to innovative low-cost legal services that would greatly expand the public’s access to justice during a time when personal freedoms are under assault by the government. Of course, that innovation ticks the wrong box.
Finally, Trump has impeded efforts by firms that are attempting to make innovative technological breakthroughs. For example, technological innovations in wind and solar energy have the potential to benefit society by reducing environmental externalities and by being sources of job growth. But Trump, who has claimed that climate change is a hoax, has issued executive orders that have paused the approval of leases, permits, and loans for both onshore and offshore wind projects on federal lands and waters and his administration has moved to revoke or reconsider permits for previously approved projects, including major offshore wind farms. In addition, the administration has imposed tariffs on imported solar cells and modules, which has increased the cost of solar installations for consumers and caused a decline in overall solar deployment.
Carbon capture and storage (CCS), a process where carbon dioxide (CO2) from industrial plants is separated before it is released into the atmosphere and transported to a long-term storage location, is another type of energy innovation. However, the Trump administration has undermined the growth of the CCS industry by cancelling billions of dollars in awards for carbon capture and other decarbonization projects, and has not implemented a CO2 tax, which could provide efficient incentives for using CCS.
Trump has made it increasingly clear that he wants his Administration to have complete control of the US economy. His discouragement of innovation will help him achieve this goal because innovations have unpredictable effects that often lead to applications and spillovers that alter an economy and make it less susceptible to government control. The private sector must act on its responsibility to oppose Trump’s war on innovation by making a concerted effort to advocate effectively for policies that do not impede innovation and by taking full advantage of its freedoms to innovate and enable the US to shed the culture of grievances that Trump cultivates to enhance his power.
