The deal meant players no longer had to defect from the communist nation to join Major League Baseball teams.
Signed in December, it enabled players to reach the US without resorting to human traffickers.
US Secretary of State Mike Pompeo said the decision to withdraw was part efforts to pressure Cuba over its support of Venezuelan President Maduro.
The policy backtrack has been criticised on social media by Cuban President Miguel Diaz-Canel, who called it "a cynical, cruel and gratuitous act".
Cuban baseball defectors visit Havana
The baseball game that brought the US and Cuba closer
Negotiations over the deal began under President Barack Obama to ease relations with Cuba, a country which traditionally produces some of the world's best players.
As part of the deal, Cuban baseball players over age 25 who played in Cuban leagues for six years were free to leave and sign with MLB teams.
The Cuban Baseball Federation (FCB) had recently given permission for its first group of athletes to begin playing in the US this year.
A state department official, however, told the BBC that "based on additional information that has come to light", the US now considers the FCB as part of Cuba's government. As such, it is subject to ongoing embargoes.
Last Friday, the US Treasury sent MLB a letter - seen by the BBC - saying payments to the FCB were now considered "payments to the Cuban government."
Image copyright AFP/Getty Images
Image caption Baseball is one of Cuba's most popular sports
MLB told the BBC it stood by "the goal of the agreement, which is to end the human trafficking of baseball players from Cuba".
The BBC understands that MLB has requested a meeting with the US government but not had a reply so far.
Before the deal, Cuban players who wanted to sign with US teams had to leave the country illegally.
For decades, as a result, many Cuban players suffered kidnapping and extortion from traffickers - some with ties to drug cartels - on their journey to America.
Among those currently playing in the MLB are Aroldis Chapman, who pitches for the New York Yankees.
"I just feel bad for those young ballplayers who are probably not going to have the same chance to play here," Mr Chapman told ESPN.
"Now the opportunity's being taken away, and some of them still want to play here at this level. And, unfortunately, they might find themselves making difficult decisions in how to get here."