Cozen Currents: All Policy is Tech Policy

“Whether seeking a competitive advantage against China, addressing immigration policy, or setting defense policy, President Trump and Congress are constantly grappling with the opportunities and challenges presented by the tech sector.” — Howard Schweitzer, CEO, Cozen O’Connor Public Strategies

The Cozen Lens

• As President Donald Trump and Chinese President Xi Jinping approach their in-person meeting next month, beneath the positive rhetoric, tensions continue to simmer beneath the surface.
• The White House’s rapid rollout of changes to the H-1B visa lottery system followed by a series of significant clarifications to the new policies highlights the challenge the Trump administration faces in balancing restrictive immigration policy with pro-growth economic policy.
• Despite increasing polarization, Congress is expected to pass the National Defense Authorization Act by the end of the calendar year, providing lawmakers with a legislative vehicle for their pet projects.

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The Current Trajectory of US-China Relations

Trump-Xi’s Honeymoon Phase. Following their successful recent call, President Trump and Chinese President Xi Jinping are scheduled to meet in person at the end of October on the sidelines of the Asia-Pacific Economic Cooperation leaders’ summit in South Korea.

• Since the trade war between the world’s two biggest economies has been put on pause, the relationship between the US and China has moved in a more stable direction. While tangible deliverables from Trump and Xi’s meeting next month will likely be minimal, having a successful meeting will be key to maintaining this momentum and avoiding backsliding toward the effective embargo that existed this spring.
• While not the trip to Beijing that Trump had been pushing for, the meeting will still be a significant moment in the US-China relationship, and its success will help lay the foundation for the president’s anticipated trip to China in early 2026. Trump also suggested that Xi would visit the US “at an appropriate time,” but did not offer any specifics on when that may occur, other than likely happening after Trump visits China.
• Still, under these positive overtures, each country is preparing potential sources of leverage in case the relationship takes a turn for the worse again. China has initiated multiple investigations into leading US semiconductor companies, the outcomes of which could be influenced by the current state of the relationship. On the US side, there is an executive order being evaluated that would limit pharmaceutical imports from China, though Trump administration officials have said it is not being “actively considered.”

An Off-Ramp for Tariffs? While the pause in elevated tariffs has de-escalated the barriers to trade between the US and China, the threat of these higher duties returning lingers, and China’s reduced agricultural imports from the US could create a new point of tension in the months ahead.

• For Trump, addressing the US’s trade deficit with China remains one of his top priorities, and he views tariffs as a helpful tool to do so to the extent they can create leverage that leads to a trade deal with Beijing. While the summit in October is unlikely to be the time when a permanent agreement is announced, Trump may view it as an opportunity to begin laying the groundwork for advancing beyond the current dynamic of extending 90-day pauses.
• One particular issue that Trump will likely raise when he meets with Xi is the decline of China’s US agricultural imports, especially soybeans. While not a significant political risk to Trump yet, the issue could become more important as the fall harvest approaches and lawmakers in Congress, including Senate Majority Leader John Thune (R-SD), come under increased pressure from their constituents. This pressure could result in rising opposition to Trump’s tariff policies from Republican lawmakers or a greater desire to boost support programs for farmers.

Fighting for the Cutting Edge. While the tech war is less of a focus for Trump, it is arguably a greater priority for China than the tariffs, and is an area where Trump has come under the most pressure from China hawks in Congress to take more decisive action.

• As part of the negotiations that appear to have resulted in a framework for the sale of TikTok’s US operations, Treasury Secretary Scott Bessent said that the US would hold off on new limits, rather than rolling back existing measures further. This strategy aligns with previous reports suggesting that the Commerce Department had been instructed to “avoid tough moves on China,” as Trump seeks a trade deal.
• This more passive strategy has seen pushback from hawkish members of Congress, with their primary focus currently on passing the GAIN AI Act as part of the annual defense policy bill. This measure would impose similar limits to the Biden administration’s proposed AI Diffusion Rule. However, it faces an uphill path to passage with senior White House officials now opposing the measure.

Conflicting Visa Objectives

The New Cost of an H-1B Visa. Earlier this month, President Trump signed a proclamation implementing a new $100,000 fee on H-1B visa applications while simultaneously proposing a suite of other changes to the lottery system.

• As of September 21st, no new applicant will be accepted into the H-1B visa program without an accompanying payment of $100,000, a number well in excess of the few thousand dollars sponsors and applicants were historically charged for successful applications. President Trump also directed the secretary of Labor to revise the prevailing wage standards for employers utilizing the H-1B program and directed the secretary of Homeland Security to prioritize the selection of high-skilled and high-paid applicants. The Department of Homeland Security subsequently rolled out a proposed rule last week that would overhaul the lottery system by providing a greater number of registrations in the lottery to positions with higher wages.
• For companies that often rely on H-1B workers, such as Big Tech firms, IT firms, and banks, the changes could have a material impact on hiring practices. Although the administration has since clarified that the fee won’t apply to existing visa holders and has hinted at exemptions for certain key sectors like healthcare, how exactly the fee will apply remains unclear, leaving many firms on uncertain ground.
• While companies may be able to replace some talent in particular verticals, such as computer programming, with domestic workers, both the Wall Street Journal and Reuters report that firms may opt to offshore other areas of expertise to save costs. Alternatively, Boundless Immigration notes that firms could opt to invest in alternative pathways, such as the O-1 and EB-1A visas, to hire foreign-born workers who demonstrate exceptional talent in their field.

An Internal Struggle Over Immigration Policy. Although the administration is plowing ahead with its reforms to the H-1B program, the ad hoc clarifications to the new guidance are illustrative of the competing pressure to appease large domestic employers.

• A very similar conflict played out earlier this year when prominent members of the agriculture and hospitality industries expressed concerns about the administration’s ramped up immigration raids. Their concerns led Agriculture Secretary Brooke Rollins to push President Trump to pause raids on farms and related sectors, something he did temporarily before quickly revoking the pause after hearing from immigration hawks within the administration and the GOP base. A similar pattern can be seen in the more recent raid on immigration workers at a Hyundai plant in Georgia and the subsequent political fallout.
• The challenge for industries seeking relief from the tough on immigration stance is that Trump and other high ranking administration officials view it as both a key campaign promise and a winning political message. Border security remains a top issue for Trump and the GOP in polls and both the White House and congressional Republicans are planning to tout the crackdown on federal services for migrants in the One Big Beautiful Bill Act as part of midterm messaging. The reforms to the H-1B visa program, in particular, date back to a first term effort to heighten scrutiny of applicants and increase wage requirements, making this month’s changes an important follow-through for the White House.
• For now, the best chance for companies to avoid the new H-1B policy changes is a lawsuit. The New York Times reports that advocacy groups are planning to start litigation in the coming weeks while Bloomberg notes that the US Chamber of Commerce is asking its members whether they too would support a legal challenge to the new rules. The authority to overhaul programs like the H-1B visa system typically lies with Congress, although there are exceptions depending on the scale and structure of the changes.

One Bill Congress Will Get Done For Sure: NDAA

Must-Pass. The National Defense Authorization Act (NDAA) is one of Congress’ few must-pass bills.

• The NDAA has passed every year since 1961 and this year is unlikely to be different, despite growing political polarization. The annual defense policy bill has an unblemished record of passage. Most lawmakers won’t want to forego the opportunity to support the troops and US national security, particularly ahead of midterm elections.
• As a must-pass bill, the NDAA also offers a legislative vehicle for lawmakers to attach other bills and pet projects as amendments (which may or may not be defense-related). The NDAA has been compared to a Christmas tree for the number of “ornaments” that get strung up.
• The House has already passed its version of the NDAA. The Senate has still not passed its version of the bill on the floor this year, and if it doesn’t do so in a timely manner, this will create pressure to go directly into negotiations with the House so as to arrive at a final bill to pass both chambers before the end of the calendar year. This would mean that senators wouldn’t have a chance to vote on their own amendments for inclusion in the upper chamber’s bill. Senate Armed Services Committee Chair Roger Wicker (R-MS) has said on the Senate floor that the chamber “need[s] to have an open amendment process.”

Tech in the NDAA. This year’s legislation features notable tech-related amendments, some relating to US competition with China.

• The House-passed NDAA includes an amendment that would require the Department of Defense (DOD) to work with the director of national intelligence to assess China’s development of advanced AI and ramifications for US national security as well as the implications of adversaries gaining access to US advanced AI. Another amendment would block the US government from purchasing any IT or communications equipment from Chinese-owned or controlled companies. A third amendment seemingly aimed at China would ban the use of social media platforms controlled by foreign entities on military installations, which presumably would apply to TikTok.
• Other House amendments relating to emerging technologies include a proposed requirement for telecom contractors receiving Pentagon contracts to be located domestically, a new quantum communications corridor for Navy research, and directions for the DOD to prepare reports on defense against AI cyber operations and the Pentagon’s use of AI for its business processes.
• The Senate NDAA currently includes the GAIN AI Act, which would require chip manufacturers to give domestic customers priority for purchases of advanced AI chips over foreign buyers. The measure doesn’t align with the Trump administration’s stance on AI exports though, which creates a major obstacle to final passage.

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