The United Stated is moving to revoke the visas of the suspects in the killing, an operation that the President labelled a ‘bad original concept’.
Speaking to reporters at the White House, Trump called the killing of Mr Khashoggi a ‘fiasco’.
He also suggested for the first time that Crown Prince Mohammed bin Salman could have been involved, telling the Washington Post that ‘the prince is running things over there’.
The President had previously appeared to believe the Saudi regime’s outright denials of responsibility.
Mr Trump told reporters: “They had a very bad original concept. It was carried out poorly, and the cover-up was one of the worst cover-ups in the history of cover-ups.
“Somebody really messed up, and they had the worst cover-up ever.”
He added: “It was a total fiasco. The process was no good. The execution was no good. And the cover-up, if you want to call it that, was certainly no good.”
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Even in the face of ugly details of Mr Khashoggi’s death, Trump has resisted calls to cut off arms sales to Saudi Arabia and has been reluctant to antagonise the kingdom’s rulers.
Members of Congress have demanded that sanctions be imposed on Saudi Arabia over the suspected state-sponsored murder of the columnist, who lived in self-imposed exile in the US and wrote critically about Mohammed bin Salman.
Mr Khashoggi vanished on 2 October after entering the Saudi consulate in Turkey, where he went to pick up documents for his marriage to his Turkish fiancee.
Turkish officials say that a Saudi team of 15 men tortured, killed and dismembered the writer and that Saudi officials had planned the killing for days.
On Tuesday Turkish president Recep Tayyip Erdogan said Saudi Arabia must identify those who ordered the murder and turn over the suspects for trial.
Erdogan delivered a sharp rebuttal of Saudi Arabia’s widely-criticised account that Mr Khashoggi died accidentally in a brawl, a story that followed weeks of denials that he had even died.
US Secretary of State Mike Pompeo said a move to revoke the suspect’s visas was just a first step.
He said: “These penalties will not be the last word on the matter from the United States.
“We’re making very clear that the United States does not tolerate this kind of ruthless action to silence Mr Khashoggi, a journalist, through violence.
“Neither the President nor I am happy with this situation.”
Despite the measures, Mr Pompeo stressed the strategic importance of the US-Saudi relationship.
He added: “We continue to view as achievable the twin imperative of protecting America and holding accountable those responsible for the killing of Mr Khashoggi.”