His administration plans on cancelling $929m (£711m) in grants for what Mr Trump has called a “failed” project.
These federal funds account for a quarter of the California rail project.
Democratic Governor Gavin Newsom called it “political retribution” for the California-led lawsuit against Mr Trump’s national emergency declaration.
The Trump administration announced on Tuesday that it is looking into cancelling the $929m grant as well as recovering a $2.5bn grant already being spent by the state.
In a tweet on Wednesday, Mr Trump again lambasted the state over the project, saying: “Send the Federal Government back the Billions of Dollars WASTED!”
California now wants to scale back their already failed “fast train” project by substantially shortening the distance so that it no longer goes from L.A. to San Francisco. A different deal and record cost overruns. Send the Federal Government back the Billions of Dollars WASTED!
— Donald J. Trump (@realDonaldTrump) February 20, 2019