Despite appeals and warnings from world leaders, President Donald Trump is poised to reverse decades of U.S. policy on Wednesday by declaring Jerusalem as Israel’s capital and beginning the process of moving the U.S. Embassy to the holy city, a step that threatens to spark unrest across the Middle East and undermine American efforts to forge a new peace plan.

Mr. Trump placed a flurry of phone calls to Arab leaders Tuesday, on the eve of a policy address in which he plans to explain the move, and fielded protests from Arab,...