Trump's announcement on Wednesday that the US would recognise Jerusalem as Israel's capital, and begin the process of moving its embassy there from Tel Aviv, was met with protests and violence from Palestinians.
Jerusalem, the eastern part of which was annexed from Jordan by Israel in 1967, has long been a sticking point in peace negotiations in the region.
On Friday, 14 of the 15 countries in the UN Security Council opposed Trump's decision.
Haley defended Trump's decision and said that such a reaction from the international community was expected.
"Trumps decision basically says that the United States acknowledges that the capital of Israel is Jerusalem, and saying also that the embassy is going to be moved to the capital, just like it is in almost every other country," she said.
"Jerusalem has the Israeli Parliament, office of the president, you prime minister, and it has the Supreme Court. So, why shouldn't we have the embassy there? Haley asked.
"And no president, not (Bill) Clinton, not (George) Bush, not (Barack) Obama, actually had the courage to make that move and listen to the will of the American people. The Senate just overwhelmingly again voted to have the embassy moved. So, the president did the will of the people," she told the CNN in an interview.
She said she strongly believed that the move "is going to move the ball forward for the peace process".
Trump, Haley said, realised that waiting did not help anyone for 22 years.
"So, now they get to come together. They get to decide what the borders will look like. They get to decide the boundaries. They get to talk about how they want to see Jerusalem going forward," she said.
Responding to a question on the Arab League, she said the US had a lot more in common with the grouping than they have ever had before.
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