The order Trump signed at the Kenosha, Wisconsin, headquarters of tool maker Snap-on Inc targets the H-1B visa programme.
The White House says the programme undercuts American workers by bringing in large numbers of cheaper foreign workers, which drives down US wages.
The order directs US agencies to propose rules to prevent immigration fraud and abuse in the programme.
Agencies are also being asked to suggest changes so that H-1B visas are granted to the "most-skilled or highest-paid applicants."