However, Trump clarified that the United States would continue selling weapons to Israel and would provide support if required. He maintained that Israel no longer needs American financial assistance.
The announcement came amid the US midterm election campaign. Trump indicated that ending financial aid could weaken arguments made by left-wing Democrats who have criticised the Republican Party over American support for Israel.
Speaking on Fox News' programme Fox & Friends, Trump said the United States would stop providing financial assistance to Israel by the end of this year. He added that Washington would continue helping Israel if the need arose. However, Trump did not explain how the funding would be discontinued by December.
The announcement also raises questions about the existing financial arrangement between the two countries. Under their current agreement, which remains in force until September 2028, the United States provides Israel with .8 billion in annual military assistance.
The development comes at a time when criticism of Israel is increasing in the United States. Democrats have repeatedly criticised Israel's military operations in Gaza. Surveys also indicate that fewer Americans are supporting Israel, while many believe Washington is providing excessive assistance to the country in the Middle East.
A June survey conducted by Quinnipiac University found that 48% of American voters and 66% of Democrats believe the United States is supporting Israel more than it should.
The timing of Trump's announcement is also politically significant. His Republican Party faces the possibility of losing control of the House of Representatives in the midterm elections. Against this backdrop, the proposed withdrawal of annual financial assistance could reshape the debate over US support for Israel and the future of their long-standing military relationship.
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