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Specifically, the president's move, observers say, could create mistrust ahead of the North Korea talks by fostering volatility and uncertainty.
"At the end of the day, can you trust the United States, can you trust the president?" DJ Peterson, president of Longview Global Advisors, a geopolitics and economic risk advisory group to corporations, investors and political organizations, told CNBC.
"[North Korea] doesn't necessarily distinguish between the Obama administration and the Trump administration; that was just a deal with America. That was a deal with the White House," he added, referring to the 2015 deal with Iran, known as the Joint Comprehensive Plan of Action.
The deal, considered a hallmark of the Obama administration, eased sanctions on Iran in exchange for limits to Tehran's nuclear program. Trump has long criticized the accord, saying it does not address Iran's growing ballistic missile program nor it nuclear activities beyond 2025.
"We will be instituting the highest level of economic sanction," Trump said Tuesday. "Any nation that helps Iran in its quest for nuclear weapons could also be strongly sanctioned by the United States."
Defense stocks popped after Trump's announcement. The iShares U.S. Aero and Defense ETF jumped 1.52 percent at session highs and was on pace for its best day since March 26, when it gained 2.62 percent. Shares of Northrop Grumman rose more than 3 percent, while Lockheed Martin and General Dynamics rose more than 1 percent.
Pulling out of the deal undoes a lot of progress in restraining Iran's ambitions, according to retired U.S. Army Lt. Col. Daniel Davis, a senior defense fellow for Defense Priorities.
"Whatever flaws the president thinks this agreement has, there are still significant constraints and limitations on Iran, all of which might be withdrawn if the deal dies," Davis told CNBC. "It would be hard to even come up with a plausible reason why North Korean leader Kim Jong Un would be willing to negotiate in good faith and come up with a deal after this."
What's more, Davis and Peterson both noted that the Trump administration is understaffed and has a high turnover amid multiple foreign policy issues.
Much of the shuttle diplomacy with North Korea is being conducted by Trump's new secretary of State, Mike Pompeo, who had already met with Kim Jong Un. The president said Tuesday that Pompeo was on his way to meet with Kim to help prepare for the talks.
"How does the U.S. administration manage a very complex negotiation with North Korea even as it is trying to manage a very complex renegotiation with Tehran and also the European Union?" Peterson said, adding that the administration faces a "bandwidth issue."
"You talk about bandwidth, one of these foreign policy issues alone would be queuing up a lot," Davis added. "But, my goodness, you have them all happening at the same time while you have the domestic stuff and you just have how much does he have to pay attention to any one issue."
Trump said Tuesday that the time, date and place were chosen for his meeting with Kim, but he did not divulge any further details.
As it stands, North Korea remains the only nation to test nuclear weapons this century.
Since 2011, Kim has fired more than 90 missiles and conducted four nuclear weapons tests, which is more than what his father, Kim Jong Il, and grandfather, Kim Il Sung, launched over a period of 27 years.
The North's arsenal includes short- and medium-range ballistic missiles, intercontinental ballistic missiles and cruise missiles. The Hwasong-15 intercontinental ballistic missile is the most powerful rocket the North has tested to date.
The missile, also known as KN-22 by the U.S., is believed to have a range capable of hitting the entire continental United States, according to estimates from the Missile Defense Project.
In short, Kim spent much of last year perfecting his arsenal by launching 24 missiles and carrying out North Korea's largest nuclear test.