"Effective immediately, I am cancelling the last administration's completely one-sided deal with Cuba. I am announcing today a new policy just as I promised during the campaign. And I will be signing that contract right at that table in just a moment," Trump told a cheering crowd in Miami's Little Havana, the spiritual home of the Cuban- American community.
Cuba's government criticised the new restrictions on ties with the US that were announced by Trump, but reiterated its willingness to hold a "respectful dialogue" with Washington.
Trump's speech, which came as the president signed a directive outlining his posture toward Cuba, is the latest attempt by the Trump administration to chip away at Obama's legacy, of which the Cuba policy of starting a historic detente was a major part.
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Obama had pushed for expanding commerce and travel between the two countries.
However, Trump, in a complete reversal, asserted that he will not lift sanctions on Cuba unless it releases all political prisoners and respects freedoms.
"We will not lift sanctions on the Cuban regime until all political prisoners are freed, freedoms of assembly and expression are respected, all political parties are legalised and free and internationally supervised elections are scheduled elections," Trump said.
Trump asserted that the US will take concrete steps to ensure that investments flow directly to the people so they can open private businesses and begin to build their country's "great, great future, a country of great potential."
Trump said his actions bypassed the military and the government to help the Cuban people form businesses and pursue much better lives.
Trump said his administration will expose the crimes of the Castro regime and stand with the Cuban people in their struggle for freedom.
"Because we know it is best for America to have freedom in our hemisphere, whether in Cuba or Venezuela, and to have a future where the people of each country can live out their own dreams," he said.
To this day, Cuba is ruled by the same people who killed tens of thousands of their own citizens, who sought to spread their repressive and failed ideology throughout our hemisphere and who once tried to host enemy nuclear weapons 90 miles from our shores, Trump said.
"The Castro regime has shipped arms to North Korea and fuelled chaos in Venezuela. While imprisoning innocents, it has
harboured cop killers, hijackers and terrorists. It has supported human trafficking, forced labour and exploitation all around the globe," Trump alleged.