Trump said his plan would "transform America's immigration system into the pride of our nation and the envy of the modern world".
"We note that U.S. postpones decision on auto tariffs for 180 days", European Trade Commissioner Cecilia Malmstrom said on Twitter.
The proposal, drafted by Trump's son-in-law and senior White House adviser Jared Kushner, has little chance of being approved by the divided Congress.
The merit-based visa system would take into account age, English proficiency and offers of employment and would require civics tests, health screenings and criminal background checks. "We will replace the existing green card categories with a new visa, the Build America visa - which is what we all want to hear", Trump said amidst applause from the audience.
The plan doesn't change the level of immigration into the United States but it is said to dramatically alter the way the United States accepts people in the country.
During his remarks, President Trump also called for changes in US asylum laws.
Efforts to overhaul the immigration system have gone nowhere for three decades because of the deep divide between Republicans and Democrats on the hot button issue.
President Donald Trump tweeted a warning for illegal immigrants: "do not make yourselves too comfortable, you will be leaving soon!"
"Are they saying family is without merit?" asked House Speaker Nancy Pelosi. The White House plan would decrease the number of people who enter the country because of family ties to 33 percent, and 10 percent of people would be allowed in for humanitarian needs.
The proposal is unlikely to gain bipartisan support in Congress, in part because it does not address protections for so-called Dreamers. Their fate is a priority for Democrats.
Krikorian wants to see the level of legal immigration reduced and is concerned that the Trump proposal doesn't even start by calling for a cut in immigration.
As a result of the "broken" rules, the annual Green Card flow is mostly low-wage and low-skilled, Trump rued, adding that the newcomers compete for jobs against the most vulnerable Americans and put pressure on social safety net and generous welfare programmes. But far more would go to exceptional students, professionals and people with high-level and vocational degrees.
A group of Central American migrants is questioned about their children's health after surrendering to US Border Patrol Agents south of the US-Mexico border fence in El Paso, Texas March 6, 2019.
It said, however, Trump agreed with findings that imported vehicles and parts can threaten United States national security, a designation likely to anger some U.S. allies.
The plan also calls for building border wall in targeted locations and continues a push for an overhaul to the US asylum system, with the goal of processing fewer applications and removing people who don't qualify faster.
The plan drew immediate criticism from Democrats as well as immigration activists, who remain deeply skeptical of Trumpafter past negotiation failures. It seeks to overhaul legal immigration and bolster border security, including a wall.
Meanwhile, Democrats say they are less interested in legal immigration than they are in the 11 million illegal immigrants who they say should be rewarded with citizenship.
The White House officials said they wanted to streamline the application process for people with legitimate asylum claims while reducing the number of those making fraudulent claims.