The software maker, a longtime proponent of making more visas available for skilled foreigners because of a talent shortage stateside, said at the time that the Vancouver facility would “allow the company to continue to recruit and retain highly skilled people affected by the immigration issues in the U.S.” Seven years later, during another round of tightening of the H-1B program, Microsoft added an engineering hub in Vancouver, while other U.S. tech giants including Amazon, Facebook, and Salesforce opened facilities in the Pacific Coast city.

That’s why many are predicting that the $100,000 fees on new H-1B applications announced last week by U.S. President Donald Trump could have the unintended consequence of sending more tech jobs to Canada. It could also be a windfall for other countries, such as India and China, with more of their skilled highly workers staying or returning home instead of working in the U.S. after graduation. Indian and Chinese nationals make up 85% of H-1B visa recipients, according to an analysis by Pew Research—and many are opting for jobs at home.

“Cities like Vancouver or Toronto will thrive instead of American cities,” Garry Tan, CEO of prominent San Francisco startup incubator Y Combinator, wrote earlier this week in a now deleted X post, according to Bloomberg.

And Royal Bank of Canada CEO Dave McKay told Bloomberg on Tuesday that the new H-1B rule “is going to help Canada retain some of those great students we brought in” instead of losing them to Silicon Valley—and make it easier to recruit others.

The H-1B visa program is used primarily by the tech sector, as well as financial institutions and consulting. According to the U.S. government, the biggest users of H1-B visas are Amazon, the India-based tech giant Tata Consultancy Services, Microsoft, Meta Platforms and Apple Inc. Non-tech companies that hire many H-1B workers include J.P. Morgan Chase and Walmart Inc.

The visas are exceedingly difficult to obtain: Each year, companies must file petitions to the U.S. government on behalf of prospective employees by March, for a lottery held in April, with just 65,000 visas available. (There are another 20,000 for U.S. master’s graduates.) In 2025, over 470,000 applications were submitted. While other visas exist, such as the “O” visa for outstanding skills, many are just as hard, or even harder, to get.

To obtain an H-1B, companies must show that the foreign worker will fill a “specialty occupation” for which the company cannot find a qualified U.S. worker. The visa holder must be paid at least the prevailing wage, so as not to unfairly compete with U.S. workers, drive down their salaries, or replace them with cheaper labor.

The H-1B program has long had critics, with many saying companies use it to bring in cheaper foreign labor for skilled jobs. Over the years, there have been periodic pullbacks of the program by the U.S. government. In 2004, the government lowered the cap on visas granted from 195,000 to 65,000 a year, and it has not been raised since, other than to add the provision for U.S. master’s holders. (An analysis in 2020 found that that the move led to a 27% increase in hiring at employers’ international offices.)

During his first term in 2017, Trump signed the “Buy American, Hire American” executive order that led H-1B denial rates to spike to 15%, up from 4% two years earlier. (The quota was still reached.)

The most recent Trump announcement set off a frenzy at many large tech companies: Microsoft, J.P. Morgan and Amazon urgently advised employees with H-1B visas to remain in the U.S. or return quickly following Friday’s proclamation. (The White House quickly clarified that the fee applied to new applications only.)

Amid the uncertainty and chaos, Canada’s comparatively predictable, company-friendly approach may well become more of a draw. In recent years, Canadian cities seem to have benefited from a less welcoming environment for immigrant workers in the United States: In 2022, a New York Times report found Toronto was North America’s third largest tech hub—behind only Silicon Valley and New York, and bigger than Seattle, Austin, and Chicago. More recently, Montreal and Edmonton, Alberta, have emerged as major artificial intelligence hubs.

While talent, government incentives, and an often weak Canadian dollar have been contributing factors in the country’s emergence as a locale of choice for American tech giants, restrictions on H-1B visas have been one of the biggest points of friction for tech employers in the U.S.

Canada is often a top choice for American technology companies opening satellite offices because of the proximity of its tech-friendly cities to their headquarters (Vancouver is just 150 miles from Seattle, home to Amazon and Microsoft) and because Canada’s immigration policies have historically allowed in more foreign high-skilled workers.

The Canadian government, along with provincial and city governments, has never been shy about trying to lure foreign tech talent from the U.S. to Canada, with high-skilled temporary visas and no limits for permanent residence on a per-country basis. We saw that with the campaign to woo Microsoft in 2007, with promises of incentives and help with location services.

That doesn’t necessarily mean that H-1B turmoil will make Canada home to the next Silicon Valley. These are regional offices after all, not headquarters. “You don’t really see much of a domestic ecosystem, certainly not coming out of those back offices,” warned Kevin Bryan, an associate professor at University of Toronto’s Rotman School of Management.

Whether Canada tries takes the new rules for H-1B applicants as an opportunity to attract more foreign tech workers remains to be seen. The wildcard is public opinion in Canada, which has also cooled to immigration. The Canadian government’s target for new permanent residents this year is 395,000 people—well below the 500,00 last year, with more decreases coming in the next two years.

But if it does, there will likely be great interest: in 2023, the Canadian government introduced a new work permit aimed squarely at H-1B holders tired of U.S. immigration procedures. The 10,000 permit applications limit was hit on the first day.