The new order asks agencies to propose ideas to direct visas - which are now distributed by lottery - to the most skilled and highly paid applicants.
"We believe jobs must be offered to American workers first", Trump told the audience at the Snap-on Tools Headquarters in Kenosha, Wisconsin, where he signed the executive order.
"Any such move will not benefit the American worker, which is the intention behind the move", he said, adding that "using salary levels as the metric is not necessarily the best indicator of benefits to the USA economy". "And it directs the federal government to fully enforce federal guidelines prioritizing the use of American firms and goods in federal projects".
I-T professional Mangesh Joshi feels the "buy American, hire American" order will adversely affect Indian job-seekers.
Silicon Valley isn't known for its protests, but the government's proposed crackdown on H-1B visas have caused the tech capital to mobilize.
The country that's going to be affected the most by this new order is India, and several politicians and business leaders have already voiced out their concerns towards the new restrictions of the program that are going take place.
"Right now, H-1B visas are awarded in a totally random lottery - and that's wrong", he said on Tuesday in Wisconsin, where he signed the order.
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As a presidential candidate, Donald Trump made a lot of campaign promises.
The administration's goal is to ensure such visas are given to the most qualified or highest-paid applicant, according to two senior officials. The tech industry has argued that the H-1B program is needed because it encourages students to stay in the US after getting degrees in high-tech specialties and because companies can't always find enough American workers with the skills they need. You report there are 600,000 H-1B visa holders, but are you also counting spouses who are allowed to take jobs? "Why shouldn't we put American companies first?"
But the White House said the programme is undercutting American workers by bringing in cheaper labour and that some tech companies are using it to hire large numbers of workers and drive down wages.
About 85,000 H-1B visas are distributed annually by lottery.
More than 15% of Facebook's US employees past year used a temporary work visa, according to a Reuters analysis of US Labour Department filings.
An administration official who briefed reporters in advance named Tata Consultancy Services, Cognizant Technology Solutions Corp and Mphasis Corp as examples of outsourcing companies that would likely have fewer visas approved as the administration's changes are adopted.
What's more, the executive orders will also require federal agencies to review and minimise the use of waivers and exceptions in global trade agreements.