The US may stop aid payments to Palestinians who are “no long willing to talk peace”, President Trump said.
On Twitter, Mr Trump said the United States received “no appreciation or respect” in return for its aid.
He also said his controversial recognition of the contested city of Jerusalem as Israel’s capital took the hugely divisive issue “off the table” for new peace talks.
Palestinians had said the move showed the US could not be a neutral broker.
Soon after Washington’s decision was announced in December, Palestinian President Mahmoud Abbas said he would not accept any US peace plan for the Middle East.
The decision on Jerusalem was also overwhelmingly condemned at the United Nations, where 128 countries voted against Mr Trump’s fulfilment of a campaign promise.
The US President was tweeting a follow-up to earlier comments about aid payments to Pakistan, in which he said the US has received only “lies and deceit” in exchange for billions of dollars in aid.