Trump, in his first prime-time televised address to the nation as commander-in-chief, came down heavily on Pakistan for its support to terror groups, saying the country receives billions in US aid but continues to harbour militants.
"For its part, Pakistan often gives safe haven to agents of chaos, violence, and terror. The threat is worse because Pakistan and India are two nuclear-armed states whose tense relations threaten to spiral into conflict. And that could happen," Trump said.
Trump said he has arrived at three fundamental conclusions about America's core interests in Afghanistan.
"Our nation must seek an honourable and enduring outcome worthy of the tremendous sacrifices that have been made," Trump said.
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"Second, the consequences of a rapid exit are both predictable and unacceptable...A hasty withdrawal would create a vacuum that terrorists -- including ISIS and al-Qaeda -- would instantly fill, just as happened before September Eleventh," he said.
Trump said the next pillar of his new strategy is a change in America's approach to Pakistan.
"We can no longer be silent about Pakistan's safe havens for terrorist organisations, the Taliban, and other groups that pose a threat to the region and beyond," Trump said.
"Pakistan has much to gain from partnering with our effort in Afghanistan. It has much to lose by continuing to harbour terrorists," he said, in an apparent warning to Pakistan.
The US President also reached out to India, seeking an enhanced role for New Delhi, especially in the economic field, to bring peace and stability in Afghanistan.
In his speech, Trump slammed Islamabad for harbouring militants who target US service members.
"But that will have to change. That will change immediately. No partnership can survive a country's harbouring of militants and terrorists who target US service members and officials. It is time for Pakistan to demonstrate its commitment to civilisation, order, and to peace.
"In the past, Trump noted that the US has been paying Pakistan billions and billions of dollars but it continues to house the very terrorists that America is fighting," he said.
"The Pakistani people have suffered greatly from terrorism and extremism. We recognise those contributions and those sacrifices," Trump said.
"But Pakistan has also sheltered the same organisations that try every single day to kill our people," he added.
In a statement following Trump's address, Secretary of State Rex Tillerson echoed the president's views on enhanced role for India in the new South Asia strategy.
"India will be an important partner in the effort to ensure peace and stability in the region, and we welcome its role in supporting Afghanistan's political and economic modernisation," he said.
"Pakistan has suffered greatly from terrorism and can be an important partner in our shared goals of peace and stability in the region," he said.
"We look to Pakistan to take decisive action against militant groups based in Pakistan that are a threat to the region. It is vital to US interests that Afghanistan and Pakistan prevent terrorist sanctuaries," Tillerson said.