Trump 'not in favour' of halting Saudi arms sales over Khashoggi disappearance
Saudi Arabia is one of the world's largest arms purchasers, with most of them coming from the US.
Khashoggi, a contributor to the Washington Post, vanished more than a week ago during a visit to the Saudi consulate in Istanbul. Turkish government sources say he was murdered there and dismembered by a 15-person assassination team flown in from Saudi Arabia for just that day.
Trump reiterated he wants answers about what happened to Khashoggi, but said he could not justify sacrificing jobs and income generated by the arms deal.
"That would not be acceptable," Trump said in the Oval Office. "They are spending $110 billion on military equipment and on things that create jobs".
The Saudis will "take that money and spend it in Russia or China or someplace else. I think there are other ways. If it turns out to be as bad as it might be, there are certainly other ways of handling the situation".
Trump again expressed concern about Khashoggi's fate.
"We don't like it," he told reporters. "We don't like it even a little bit".
US senators wrote a letter to Trump on Wednesday demanding an investigation.
Under the Global Magnitsky Human Rights Accountability Act, such a letter compels the White House to report to Congress within 120 days with a determination about whether human rights abuses occurred, and whether sanctions should be applied.
Stern-faced senators including those in Trump's Republican Party signalled that arms sales could be a way to punish Riyadh.
Congress has the power to temporarily block major arms deals, and several senators signalled they would consider doing so.
Senate Foreign Relations Committee chairman Bob Corker said that during the 120-day review period, Trump's administration "will be under immense pressure, if it's determined that Saudi Arabia was involved, to sanction very severely the people who've been involved in this".
Trump, speaking earlier to Fox News, said Khashoggi's situation marked a "terrible precedent. We can't let it happen. And we're being very tough and we have investigators over there".
Khashoggi has criticised Crown Prince Mohammed bin Salman in his writings.
The Post has reported that Prince Mohammed ordered an operation to "lure" the journalist back home -- an operation that may have gone wrong in Istanbul.
The $110 billion in military sales which Trump referred to was announced last year by the US administration prior to Trump's first foreign trip, which was to Saudi Arabia.
Saudi Arabia has used US-supplied weapons in its war in Yemen against the Iran-backed Houthi rebels since March 2015. The conflict has killed more than 10,000 people since then, the vast majority of them civilians, and caused the world's worst humanitarian crisis, according to the UN.
The Saudi coalition has been repeatedly blamed for bombing civilians, including a strike on a wedding hall in the Red Sea coastal town of Mokha in September 2015, in which 131 people died.