The US president initially linked the border wall and California bullet train in a tweet earlier in the week, claiming the rail project was hundreds of times more expensive than "the desperately needed Wall!"
The U.S. Department of Transportation announced Tuesday night it was canceling grant funds to California's high-speed rail project.
The Department of Transportation is accusing California officials of missing several deadlines tied to the $929 million appropriation for the state's high speed rail line.
California is leading a 16-state coalition in challenging Trump's power to declare an emergency so he can accelerate his plans for a wall on the U.S. -Mexico border.
"I come in the spirit of true collaboration and desire to help support these efforts not just financially, but also to create the conditions where we're having a different conversation", Newsom said at the LBCC event.
Gavin Newsom has acknowledged the truth-that the state's proposed high-speed train plan doesn't have a realistic future beyond the first stage-the feds (and a gloating President Donald Trump) are swooping in to try to get their money back.
"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", Trump wrote in a tweet on Wednesday.
This railway system would have ultimately allowed trains to travel at speeds of up to 220 miles per hour (354 km/h), connecting Los Angeles to San Francisco.
"California's high-speed rail fantasy quickly became a train to nowhere at taxpayer expense", Schatz said.
This is only part of the $2.5 billion the state has already received from the feds in order to launch the $77 billion-plus boondoggle.
Newsom said he planned to refocus the high-speed rail project to link Merced and Bakersfield, a Central California route that by auto can take up to three hours. The department added in a statement that it "is actively exploring every legal option to seek the return from California of $2.5 billion in Federal funds (Federal Railroad Administration) previously granted for this now-defunct project".
"Unfortunately, President Trump is playing politics with California's jobs, infrastructure, and economy", he said in an emailed statement. Congress appropriated the money in 2010.
The government is also looking to collect on some of Californa's unpaid bills from the project. However, the Democratic governor insisted he isn't killing the rest of the project altogether and said the state will explore ways of financing a project that links the Bay Area with Southern California.
The federal government's moves are the latest point of friction between the Trump administration and California's state government.
California Gov. Gavin Newsom, meanwhile, vowed to fight to keep the money, alleging that the move by the federal government was retaliation for the lawsuit.
Tuesday's comments won't be the last; the administration has given California until March 5 to formally respond.