"Right now the Palestinians aren't willing to to make peace, they're not. They are not looking to make peace", Trump said in the interview with the right-wing paper. "And I am not necessarily sure that Israel is looking to make peace", the president said. "So we are just going to have to see what happens".
Trump also said that Israeli settlement building in the West Bank complicates peacemaking efforts - a slight backtrack on his previous assertion that settlements do not pose an obstacle to reaching a deal.
American Ambassador to Israel David Friedman attends the lobby for Israel-US relations at the Knesset on July 25, 2017.
"The settlements are something that very much complicates and always have complicated making peace, so I think Israel has to be very careful with the settlements", he said. "It's our only opportunity and it will never happen after this".
Trump announced in December that he would formally recognize Jerusalem as the capital and move the US embassy there from Tel Aviv, a promise several presidential candidates had made over the years but on which none had followed through once in power.
In an open challenge to critics of a Palestinian state, Gabriel asked: "How do you want Israel's future to look like?"
The president added that as part of the plan, "We will be talking about settlements".
Trump is also withholding tens of millions of dollars from UNRWA, the United Nations agency for Palestinian refugees.
In his Israel Hayom interview, Trump declined to discuss whether the USA would cut off support to countries that boycott Israel. "When I think of the likely consequences I think this is more ambivalent", Gabriel said.
Mr Trump repeated his view that the nuclear deal signed by the Obama administration with Iran was "catastrophic" and "terrible for so many sides, but especially for Israel" but would not... He made a point of keeping his campaign promise on Jerusalem, which he noted in the interview, underlining its importance to him personally to "get done" in his first year in office. "Obama was awful. He was absolutely bad for Israel".
He said he believes Israel is demonstrating "great sensitivity" in allowing the freedom to practice diverse religious beliefs at the holy sites that are located in Jerusalem. "I think Bibi Netanyahu is a terrific person, a terrific leader, I think the relationships are good, but I think they will be a lot better if they ever get to making a peace deal".