Trump, during his first address to Congress, noted that "nations around the world, like Canada, Australia and many others have a merit-based immigration system".
He said that such a system will save countless dollars and raise workers' wages.
Trump introduced the idea of a merit-based immigration system after invoking the memory and words of late president Abraham Lincoln, saying, "Lincoln was right - and it is time we heeded his words."
Trump, 70, said he is going to bring back millions of jobs.
"Protecting our workers also means reforming our system of legal immigration. The current, outdated system depresses wages for our poorest workers, and puts great pressure on taxpayers," he said.
Trump said he believes that real and positive immigration reform is possible as long as it focuses on the goals to improve jobs and wages for Americans to strengthen the country's security and to restore respect for laws.
"Solving these, and so many other pressing problems, will require us to work past the differences of party. It will require us to tap into the American spirit that has overcome every challenge throughout our long and storied history," he said in his prime-time speech which was devoid of attacks on Democratic opponents and media organisations.
Indian IT professionals account for the largest number of foreign nationals coming to the US on H-1B visas.
During his presidential campaign, Trump had promised to increase oversight of our H-1B and L-1 visa programmes that are used widely by Indian tech companies.
The H1B visa is a non-immigrant visa that allows American firms to employ foreign workers in occupations that require theoretical or technical expertise. The technology companies depend on it to hire tens of thousands of employees each year.
In his address, Trump said that he has inherited a very
bad economy.
"As I outline the next steps we must take as a country, we must honestly acknowledge the circumstances we inherited. Ninety-four million Americans are out of the labour force. Over 43 million people are now living in poverty. And over 43 million Americans are on food stamps," he said.
America, he said has lost more than one-fourth of its manufacturing jobs since the North American Free Trade Agreement (NAFTA) was approved, and lost 60,000 factories since China joined the World Trade Organisation in 2001.
"Our trade deficit in goods with the world last year was nearly USD 800 billion. And overseas, we have inherited a series of tragic foreign policy disasters," he added.
"But to accomplish our goals at home and abroad, we must restart the engine of the American economy, making it easier for companies to do business in the United States and much, much harder for companies to leave our country," Trump said.
"My economic team is developing historic tax reform that will reduce the tax rate on our companies so they can compete and thrive anywhere and with anyone," he said.
"At the same time, we will provide massive tax relief for the middle class. We must create a level playing field for American companies and our workers. Have to do it. Currently, when we ship products out of America, many other countries make us pay very high tariffs and taxes, but when foreign companies ship their products into America, we charge them nothing or almost nothing," he said.
"I believe strongly in free trade, but it also has to be fair trade. It's been a long time since we had fair trade," Trump said in his maiden address to the joint session of the US Congress.
Promising his countrymen economic prosperity, internal security and a nation which believes in the principles of peace through strength, Trump said America is willing to find new friends to forge new partnerships.
"We know that America is better off, when there is less conflict -- not more. We must learn from the mistakes of the past - we have seen the war and destruction that have raged across our world," Trump said.
In his address, Trump rued that while the United States has spent trillions of dollars overseas, the infrastructure at home has so badly crumbled.
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