On Monday, U.S. President Donald Trump signed an executive order barring workers on H-1B visas from replacing American workers on federal contracts.

The executive order makes it harder for federal agencies to hire workers in the U.S. on H-1B visas, requiring employers to prove they are not replacing qualified American workers with people from other countries and preventing federal contractors from shifting H-1B workers to other job sites in a manner that would "displace American workers."

The new order does not represent a significant policy shift but rather escalates Trump's assault on the U.S.'s H-1B visa program for high-skilled foreign workers, the vast majority of whom are from India. The president has ramped up his criticism of the H-1B program in recent months as the coronavirus pandemic has led to widespread joblessness and decimated the economy on which he'd hung his reelection bid. In June, he ordered a temporary halt to visas for foreign workers through the end of the year, a moratorium that targeted the H-1B and H-4 visas issued to workers in the tech industry and their families. Monday's order also made an example of a single organization, the Tennessee Valley Authority or TVA, which had planned to outsource some of its technology contracts to companies with foreign workers.

“H-1Bs should be used for the top, highly paid talent to create American jobs, not as inexpensive labor program to destroy American jobs,” Trump said on Monday.

The Tennessee Valley Authority

Monday's order pilloried the TVA, a federally-owned corporation that generates electricity, aids in flood control efforts, and provides economic development in the southeastern United States. In introducing the new hiring directives, the order cited the TVA's recent decision to lay off dozens of workers and outsource 20% of its technology jobs to companies based outside the U.S., using H-1B visas

On Monday, Trump fired TVA chairman Skip Thompson, whom Trump appointed to the job, and another member of the TVA board, referencing TVA's plans. Trump said he was made aware of the TVA case after seeing an ad aired on Fox News by the U.S. Tech Workers, an organization that advocates for U.S. limits on visas for foreign technology workers.

At the White House on Monday, Trump said TVA chief executive Jeff Lyash called to tell him that it had a "strong willingness to reverse course" in its decision to outsource the technology work.

Later, in a statement on Tuesday, the TVA said, it "understands and supports" Trump's order, and that "all jobs related to TVA's Information Technology department must be performed in the U.S. by individuals who may legally work in this country."

Tennessee Sen. Lamar Alexander, a Republican, came to TVA's defense following Trump's announcement.

"TVA may have shown poor judgment hiring foreign companies during a pandemic, but, on most counts, it does a very good job of producing large amounts of low-cost, reliable electricity," Alexander said.

H-1B visas

The U.S.'s H-1B visa program provides a pathway for foreign workers with specialized knowledge to work and reside in the U.S.; it's favored by U.S. tech giants. In 2019, the U.S. had nearly 400,000 H-1B visa holders and they were predominantly made up of tech workers and Indian citizens. Of the visa holders, 72% were from India and 65% worked in 'computer-related' occupations, according to the United States Citizenship and Immigration Services.

Compared to high-tech private employers, the U.S. government is a small beneficiary of H-1B visas but it does still rely on the program. Following a Trump executive order in 2017 to 'hire American,' the U.S. Department of Labor conducted a review of private companies and federal contractors to assess their dependence on H-1B visa holders. In 2019, it found that the DOL had issued 2,000 H-1B visas for federal contract workers in the first nine months of the year, according to a Bloomberg review of DOL data.

More changes may soon be in the pipeline for the H-1B visa program. Last week, Trump said the White House is working on a merit-based immigration bill. According to new federal proposals, potential changes to the H-1B visa program may include wage requirements for applicants and restricting the ability of visa holders' spouses to work in the U.S.