Secretary of State Mike Pompeo could announce Cuba's designation as soon as Monday, one of the officials said on condition of anonymity. Cuba was originally designated as an SST in 1982 but was delisted in 2015 by President Barack Obama.
Trump has reversed many of Obama's overtures to Cuba and also imposed sanctions on its leftist ally Venezuela, a stance that helped win support among immigrant communities in Florida, a crucial state in USA elections.
The US has maintained a crippling economic blockade - estimated to have cost Cuba some $753.69 billion - on the country since its 1959 revolution.
According to the state department, Havana has since hosted US-designated terrorists, including Colombia's National Liberation Army, and has refused to return wanted terrorist Joanne Chesimard, who is accused of executing a New Jersey state trooper.
The Trump administration has taken hardline policies toward Cuba reversing those introduced during the Obama era.
Pompeo also cited Communist-ruled Cuba's security support for Venezuelan President Nicolas Maduro, which he said had allowed the socialist leader to maintain his grip on power and create "a permissive environment for global terrorists to live and thrive within Venezuela".
An exception to sovereign immunity that would allow individual US Persons to bring claims against the Cuban government in US courts for personal injury and death resulting from terrorism or material support for terrorism.
Under President Donald Trump, the US labeled Cuba part of a "Troika of Tyranny" with Nicaragua and Venezuela.
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Blacklisting is expected to further hamper foreign investment in Cuba. In the same year, the two enemy countries re-established diplomatic relations in an attempt to turn the page on the Cold War.
Trump took a tough line on Havana and reinstituted numerous sanctions that the Obama administration had eased or lifted after the restoration of full diplomatic relations in 2015.
'Transactions with the Republic of Cuba would have an increase in scrutiny, resulting in fewer governments and companies wanting to engage with it, ' he said.
The Cuban government believes Trump is seeking last-minute political gain with a move favored by Cuban exiles in Florida.
President Obama began to normalise relations with Cuba in 2015.
Cuba's foreign minister responded to the move saying: "We condemn the hypocritical and cynical designation of Cuba as a state sponsor of terrorism by the U.S.".
The organization's president, Geoff Thale, called the move a "vindictive step that will harm Cuban people, and do nothing that genuinely advances human rights or USA interests". The best of journalism is shrinking, yielding to crude prime-time spectacle.