Trump's executive order prohibits purchase or use of equipment from companies that pose "an unacceptable risk to the national security of the United States or the security and safety of United States persons."
"This administration will do what it takes to keep America safe and prosperous and to protect America from foreign adversaries," White House spokeswoman Sarah Sanders said.
Although a senior White House official insisted that no particular country or company was targeted in the declaration, US officials have been trying to persuade allies not to allow China a role in building next-generation 5G mobile networks, warning that doing so would result in restrictions on sharing of information with the United States.
US government agencies are already banned from buying equipment from Huawei.
"Restricting Huawei from doing business in the US will not make the US more secure or stronger," Huawei said in a statement, "This will only serve to limit the US to inferior yet more expensive alternatives.
"In addition, unreasonable restrictions will infringe upon Huawei's rights and raise other serious legal issues," it said.
China's foreign ministry spokesman Geng Shuang reacted furiously.
"For some time, the United States has abused its national power to deliberately discredit and suppress by any means specific Chinese enterprises, which is neither honourable nor fair," he said.
"We urge the US side to stop the unreasonable suppression of Chinese enterprises on the pretext of national security and to provide a fair and non-discriminatory environment," the spokesman said.
Beijing was already furious about US moves to limit use of equipment from Chinese firms including Huawei and another company ZTE.
The move also threatens a further flare up in trade tensions just days after the US more than doubled tariffs on $200 billion of Chinese imports, which was met with retaliation in kind by Beijing.
Confidence in Trump still strong, according to new poll
So far, the US campaign to lobby other countries to turn their backs on Huawei has had mixed results.
Even the British government, one of Washington's closest allies, is mired in debate over whether to follow the US lead or allow Huawei to exercise it proven expertise in developing the 5G capacities.
Trump's latest move came as a POLITICO/Morning Consult opinion poll released Wednesday revealed that 54 percent of respondents believe the president has been successful in business, while 36 percent say he has been unsuccessful.
Recent news reports say Trump has lost more than $1 billion in the span of a decade.