"To outright ban people, because they belong to one particular religion? That's just stunningly contrary to the fundamental values of our nation, which were built on tolerance," Kerry said in an interview with ABC's "This Week" programme.
Trump called for the temporary ban earlier this week after a Muslim husband and wife killed 14 people in a shooting rampage in California that has been classified as a terrorist act.
The proposal, coming on the heels of other incendiary anti-Muslim remarks by the billionaire real estate tycoon, set off a firestorm both in the United States and abroad.
Speaking separately on CBS News' "Face the Nation," Kerry said Trump's ban was "a very dangerous foreign policy."
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"It says to those in Islam who are trying to exploit people and recruit foreign fighters and otherwise, it says look, look at America. Here they've got a guy running for president who is waging war against Islam," Kerry said.
"It's exploitable, whether he intended it or not. And it allows for recruitment. It allows for America to seem like it is indeed discriminatory against Islam, against Muslims."
Kerry said it was clear from his exchanges with other diplomats in Paris that Trump's anti-Muslim comments were damaging to US foreign policy.
"I think it's got a huge downside in terms of American foreign policy and I hear this from foreign ministers and others as I travel and engage with people in various countries," he said on CBS.