On Trump's first trip overseas as president, he visited Saudi Arabia and announced the massive arms sales package.
The issue threatened the strong relationship the Trump administration has constructed with Mohammed Bin Salman.
But on Wednesday, the State Department said the US had no advance knowledge of Khashoggi's disappearance.
The Post report cited USA intelligence intercepts of Saudi officials discussing the plan, as well as interviews with some of Khashoggi's friends.
The US peace group Code Pink mounted a protest in front of the Saudi Embassy in Washington Wednesday, brandishing signs saying "Where is Jamal Khashoggi?" and "Khashoggi: Another Victim of Saudi Violence".
A Washington Post report, based on intercepted Saudi communications, indicated that bin Salman's government had previously tried to lure Kashoggi back to Saudi Arabia so he could be detained.
Khashoggi went missing from the Saudi Consulate in Istanbul on October 2, 2018. His fiancee and friends have said he did not leave the building. It said they checked into two hotels in Istanbul on October 2 and left later that day.
Khashoggi had entered the consulate at the time to get documents for his forthcoming marriage.
Turkish government sources said at the weekend that police believed Khashoggi was killed by a team specially sent to Istanbul and thought to consist of 15 Saudis.
Under the law, Trump would have 120 days to report to the Senate with a determination and a decision on the imposition of sanctions.
The Washington Post, where Khashoggi had been a regular contributor over the past year, also demanded answers.
National Security Adviser John Bolton and senior adviser Jared Kushner, President Donald Trump's son-in-law, talked with Salman Tuesday, while Secretary of State Mike Pompeo had a follow-up call with the Saudi leader to reiterate the us demand for information about the case, the White House said.
One of them was the New York Times columnist and Pulitzer Prize winning author Thomas L. Friedman.
Ankara wants to cooperate with Riyadh but Saudis must reciprocate, he said at a press briefing in Baghdad. "We can't let it happen". The Saudis deny the allegation but have not been able to provide proof that he left the consulate alive.
Trump's volatile diplomacy has also affected ties with Saudi Arabia. U.S. ties have always been anchored by energy interests, counter-terror cooperation and more recently by U.S. -Saudi military cooperation in the Yemen civil war. But Trump has often talked down to Saudi officials by asserting that the U.S.is "protecting" them, therefore they need to pay more money in exchange for this protection. We're working with Turkey, we're working with Saudi Arabia. "He said: 'Are you kidding?" And I love the King, King Salman.
The US State Department has said it has no information about Mr Khashoggi's whereabouts.
Despite this Riyadh's responses remained weak against Trump's insults. Murphy is part of a growing call in Congress to check US support - which includes aerial refueling and arms sales - amid reports Saudi airstrikes have killed civilians.
US Secretary of State Mike Pompeo has called for Saudi Arabia to support an investigation into Khashoggi's disappearance. The report did not cite a reason for the request, but any foot-dragging on the part of the Saudis will only reinforce suspicions that a crime is being covered up.
Did the USA know about the assassination?
Cengiz appealed to Trump in an opinion piece for the Washington Post on Tuesday, calling on him to "help shed light on Jamal's disappearance".
USA officials quoted by the Post described the intelligence concerning a Saudi plot to abduct Khashoggi as too vague to trigger a warning to the journalist under longstanding American policy.
"Although I can't go into intelligence matters, I can definitively say that we had no knowledge in advance of Mr Khashoggi's disappearance", Palladino told reporters.