"Today, I am waiving the application of certain nuclear sanctions, but only in order to secure our European allies' agreement to fix the awful flaws of the Iran nuclear deal", he said in the statement.
"So Trump now has issued explicit May deadline to Congress and Europeans: Fix Iran nuke deal or no more sanctions waivers", wrote Mark Dubowitz, head of the Foundation for Defense of Democracies.
Iran has complained that United States sanctions not connected to nuclear activity have effectively cancelled out any financial benefits it expected from the 2015 deal.
Trump said this is the last chance, and in the absence of an agreement, the USA would not remain a party to the deal.
China argues against Washington's unilateral anti-Tehran sanctions and speaks for implementation of the Iran nuclear deal, which "has not come by easily", Foreign Ministry Spokesperson Lu Kang told reporters on Saturday.
Foreign Minister Mohammad Javad Zarif has said Trump's aggressive stance on the deal and Iran generally have also violated the commitment to "refrain from any policy specifically meant to directly and adversely affect the normalisation of trade and economic relations with Iran" in the accord.
The White House wants European Union signatories to agree permanent restrictions on Iran's uranium enrichment.
Additionally, the president is hoping that the Iran deal will require better United Nations inspections of Iran's nuclear sites and that Iran avoid a "breakout period" of being able to produce enough uranium for a nuclear bomb.
US President Donald Trump speaks before signing a proclamation to honour Martin Luther King Jr. day in the Roosevelt Room of the White House in Washington, US, January 12, 2018.
"High-level" enrichment of 20-percent is used for nuclear medicines, but also leaves only a small amount of work to get to the 90-percent level needed for a nuclear weapon.
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"Our biggest priority is to maintain the JCPOA, but of course not at any price", he added.
"If at any time I judge that such an agreement is not within reach, I will withdraw from the deal immediately", he added.
What is the nuclear deal?
"We are targeting the Iranian regime, including the head of Iran's judiciary, for its appalling mistreatment of its citizens, including those imprisoned exclusively for exercising their right to freedom of peaceful assembly, and for censoring its own people as they stand up in protest against their government", Treasury Secretary Steve Mnuchin was quoted as saying by Bloomberg. Officials, congressional aides and outside administration advisers said had the president would likely extend the sanctions waivers, citing progress in amending USA legislation that governs Washington's participation in the deal.
U.S. officials say the president will work with European partners to try to broker an agreement limiting Iran's ballistic missiles activities.
Trump has argued behind the scenes that the nuclear deal makes the United States look weak, a senior US official said.
Letting the waivers lapse would have violated the 2015 agreement that Iran reached with world powers in exchange for curbing its nuclear program, said the report.
The president also wants the US Congress to amend a law on US participation in the nuclear deal, so that Washington could reimpose all sanctions if Iran breaches certain "trigger points".
"We are gradually coming to the conclusion that an internal decision by the USA to leave the JCPOA has already been made or is close to being made", Deputy Foreign Minister Sergei Ryabkov told the Interfax news agency.