After Trump announced last month that he was recognizing Jerusalem as the capital of Israel and planned to move the US embassy there, Palestinian Authority President Mahmoud Abbas said that the ceremony "represents a declaration that the United States has withdrawn from playing the role it has played in the past decades in sponsoring the peace process".
USA funding for the Palestinians is $260 million, separate from about $50 million that helps pay for Palestinian security services.
Even some Israelis who are generally critical of the Palestinians, and would eventually like to see the UN Relief and Works Agency disappear, expressed reservations about any sudden cut in donations.
The move follows Trump's controversial decision in December to recognise Jerusalem as Israel's capital, provoking unrest and triggering clashes in the Gaza Strip.
President Trump suggested Tuesday that he may cut off aid payments to the Palestinian Authority if it does not resume peace negotiations with Israel.
Senior Palestinian official Hanan Ashrawi said in a statement that "we will not be blackmailed".
Michael Herzog, an Israel-based fellow with the Washington Institute for Near East Policy who has participated in most of the Israeli-Palestinian peace negotiations, said that many Israelis supported some cuts in external funding to the Palestinian Authority, given that part of its budget goes to supporting the families of Palestinians who carried out terrorist attacks against Israelis.
Palestinian President Mahmoud Abbas has previously stated Palestine would only agree to peace if Israel agreed to a two-state solution with East Jerusalem as the capital for a future Palestinian state.
Earlier the USA announced its plan to cut funding to various UN bodies for an alleged anti-Israeli bias and said it would cut aid to nations, which voted for a non-binding UN Assembly resolution, which condemned United States recognition of Jerusalem as Israeli capital.
Palestinians say Jerusalem "not for sale" after Trump threatens to cut aid
Meanwhile, the poll also asked Israelis what "should be Jerusalem's status after there is stable peace between Israel and the Palestinians".
Speaking at a news conference, U.S. envoy to the United Nations, Nick Haley, clarified Trump's tweets. But the Israeli government would not want to see the collapse of the Palestinian Authority, he said.
"We're not giving the aid, we're going to make sure they come to the table and we want to move forward with the peace process". "By recognizing Occupied Jerusalem as Israel's capital Donald Trump has not only violated of global law, but he has also singlehandedly destroyed the very foundations of peace and condoned Israel's illegal annexation of the city", it said". "We don't care", Trump told reporters at the White House.
The United States now gives the PA some $600 million in annual aid.
Palestinians have said that these tweets prove how the United States can not be a neutral party in any form of peace talks.
Earlier yesterday, Mr Trump's UN ambassador disclosed plans to stop funding a United Nations agency that provides humanitarian aid to Palestinian refugees.
"As I said in December, we won't forget the Jerusalem vote".
Haley stressed that the U.S. was seeking to revive the peace process. It later said the ambassador would return.
It's not clear what Trump meant by having taken Jerusalem "off the table".
In response, the Palestine Liberation Organization's Twitter feed said Trump's Jerusalem decision had damaged peace prospects.
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Friday's accident comes as the government tries to woo back tourists following years of unrest that drove them away. In 2013, 19 tourists, including nine from Hong Kong, were killed when their balloon caught fire.