What's at stake? It's too early to say.
Complicating the issue: There's no clear definition for what constitutes a sanctuary city. It's a broad term applied to jurisdictions that limit cooperation with federal immigration enforcement. And courts have ruled there are restrictions on what money the government can withhold from states and cities to influence local laws.
Still, the administration's threat could potentially result in slashing billions of dollars in federal grants that pay for a range of programs for crime and domestic violence victims, drug treatment, missing and exploited children, forensic labs, services for the disabled, and boys' and girls' clubs.
Here are five US cities and what they stand to lose:
Seattle has filed a lawsuit challenging Trump's executive order
on so-called sanctuary cities, calling it "fatally ambiguous" and unconstitutional.
More than $55 million of Seattle's 2017 operating expenses come from federal funding.
More than $99 million is dedicated to longer-term capital investments, the city says.
Of the Human Services Department's 2017 budget, which amounts to about $150 million, more than $42 million -- or 28% -- derived from those funds, the lawsuit says.
That includes $15 million from the budget of the Homeless Strategy and Investment Division for shelter, outreach, hygiene, and health care for homeless people.
A Community Development Block Grant provides $4 million for emergency shelter, transitional housing and other services for homeless single men, women, and families.
More than $11 million is destined for home-based care for elderly people with disabilities.
Support for low-income housing, meals for children in child-care homes and youth violence-prevention programs would also be affected, the lawsuit says.
"Without this funding, many programs will be diminished, less effective, or cease functioning entirely."
The Police Department is scheduled to receive north of $2.8 million from the federal government. That's a portion of more than $10.5 million in federal aid over several years.
The money helps pay for bomb suits, human trafficking investigations, body cameras, community policing, terrorism prevention, and efforts to combat the sexual exploitation of children over the Internet.
The Transportation Department is due more than $63 million in capital funds for maintenance, bridge replacements, seismic retrofits, and bike and pedestrian path improvements.
Bottom line: At least $276.8 million
New York City
New York received about $53 million from the Justice Department in fiscal 2017, according to city officials. That's a small fraction of its total budget.
The bulk of the funds went to the police and corrections departments for crime lab equipment, drug and gang task forces, crime prevention and domestic violence programs.
About $17.5 million were for the purchase of new ballistic helmets and vests for the country's largest police force, city officials say.
Since fiscal 2012, the average amount the city received in revenue from Justice Department was $43 million.
The funding helps pay for the city medical examiner's molecular genetics lab,
which works to identify gene defects that may be responsible for sudden unexplained deaths, particularly in young people, according to spokeswoman Julie Bolcer.
The office also receives funding for its DNA crime lab, the largest in North America. The potential loss of $4.7 million in federal grants could affect the testing backlog on some 50,000 items of DNA evidence collected each year from sexual assaults, homicides and other crimes.
Bolcer said the medical examiner's office was working with city budget officials to prepare for possible cuts.
"We really can't discuss impacts without having more information about what might happen," she said.
The Administration for Children's Services received a three-year Second Chance Grant totaling $750,000 for services to incarcerated juveniles returning to the community, according to city officials.
Bottom line: At least $53.7 million
In Chicago, $3.6 billion in federal funds are at stake, possibly jeopardizing money to pay for everything from feeding low-income pregnant women to repairing roads and bridges, according an analysis by the Better Government Association, a nonpartisan state watchdog group.
At least $72 million to build or rehabilitate affordable housing are among those funds, the group says,
Police could lose $9.6 million from the Edward Byrne Memorial Justice Assistance Grant, which alone allocated $274.9 million throughout the country in 2016, according to the Bureau of Justice Statistics.
California, for instance, received $30.5 million from the Byrne grant, Texas got $21.4 million.
Also in danger are $100 million to fight homelessness and maintain affordable housing, $178 million for infrastructure, and $861 million for the Chicago Public Schools, the Better Government Association says.
Bottom line: At least $3.6 billion
The Justice Department awarded the city $26 million in fiscal 2015, says mayoral spokeswoman Ajeenah Amir.
The funds supported police training and equipment, technological improvements in city courts, gun violence prevention efforts, and a legal clinic for victims of domestic violence.
"The Executive Order makes clear that the federal government would use its discretion and that they would be cautious about cutting law enforcement funding," the city says in a fact sheet on immigration and sanctuary cities.
"The Trump administration has already said that it is unwilling to cut some law enforcement funding, even for sanctuary cities -- so we are not likely to face losing all of our federal funding."
Bottom line: At least $26 million
Los Angeles receives more than $500 million annually in federal grants, according to spokesman George Kivork. The money helps pay for an array of services -- from securing the city's port to sheltering its homeless.
Those funds include more than $115 million for public safety programs.
Bottom line: More than $500 million
'Ultimately, the courts will determine'
In total, nearly $27 billion in federal grants and direct payments poured into America's 106 sanctuary cities in fiscal 2016, according to an analysis by the nonprofit OpenTheBooks.com.
Most of the federal money went to infrastructure such as housing, education, law enforcement and transportation, says Adam Andrzejewski, the study's author.
"Ultimately, the courts will determine the scope of federal funding penalties," he adds.
Attorney General Jeff Sessions has said that cities and states hoping to receive federal funds or grants must comply with federal law requiring local authorities to share citizenship or immigrant status of individuals to the Immigration and Naturalization Service if requested.
In a series of letters to officials in major cities like New York, Chicago and Philadelphia, the Justice Department reiterated its threat. Local governments have been given until June 30 to prove compliance with federal immigration law or risk losing justice assistance grant money.
The administration had been vague about which cities or which funds it may claw back. The policy was actually put in place by the Obama administration.
Legal precedent makes clear the federal government cannot broadly use federal funds to coerce local jurisdictions into certain actions. The government would likely be limited to pulling funds that it can prove are related to the policy it is targeting, namely immigration enforcement.
Laurie Robinson, a former assistant attorney general who headed the Office of Justice Programs in the Clinton and Obama administrations, believes Sessions will deliver on the threat to pull funds. How far will the administration go, however, remains unclear.
"Trump had said, 'We're going to cut off all money to the sanctuary cities,' but yet they haven't actually defined what sanctuary cities are," said Robinson, a criminology professor at George Mason University in Virginia.
"One might ask, 'What about HUD (Housing and Urban Development) money or Department of Education money or transportation money?'"