The richest man in the world agreed a $NZ70 billion takeover bid with the Twitter board last month.
But he said it was not a done deal and that ideally it would be completed in the next two to three months.
Twitter's decision to ban the former US president was "morally wrong and flat-out stupid", Musk told the Financial Times Future of the Car summit.
In January 2021, Twitter said Trump's account was "permanently suspended ... due to the risk of further incitement of violence" following the storming of the Capitol.
But the Tesla owner said: "I would reverse the permanent ban but I don't own Twitter yet so this is not a thing that will definitely happen."
He said the ban had not silenced Trump, but by making him move onto his own Truth Social site, it had amplified his voice among the far right.
He pointed out that Trump had previously said he would not return to Twitter even if his account was reinstated.
Musk said he had spoken to Twitter co-founder Jack Dorsey on the subject of locking users out of their social media accounts in response to offensive tweets.
"He and I are of the same mind that permanent bans should be extremely rare and reserved for accounts that are bots or scam accounts," he said.
Musk said if someone tweeted something "illegal or otherwise destructive to the world" there should be temporary suspension or the post should be made invisible.
He said Twitter needed to build more trust by sharing its algorithm and asking people to make suggestions on how to improve it.
He said the company had a strong left bias because of its origins in the San Francisco tech community and needed to be "more even-handed".
"Victory would be the far right 10% and the far left 10% are equally upset," he said.
Last week activist groups wrote an open letter to Twitter advertisers warning that under Musk's management, "Twitter risks becoming a cesspool of misinformation, with your brand attached".