The executive order covers not just interference with campaign infrastructure, but it also covers the distribution of disinformation and propaganda, national security adviser John Bolton told reporters.
Trump has repeatedly said he wants to combat foreign interference, Bolton said, and the United States has already sanctioned Russian individuals and entities. "We have seen signs. capabilities from Iran and even North Korea".
The order, coming only eight weeks before congressional elections on November 6, drew immediate criticism from both Republican and Democratic lawmakers as too little, too late.
Under the new order, titled "Imposing Certain Sanctions in the Event of Foreign Interference in a United States Election", the intelligence community will have 45 days after each election to assess whether any foreign actors meddled.
U.S. intelligence agencies concluded in 2016 that Russian Federation was behind an effort to tip the scale of the USA election against Hillary Clinton, with a state-authorised campaign of cyber-attacks and fake news stories planted on social media.
A special counsel has been investigating possible Russian meddling in the 2016 presidential election and whether Trump's campaign colluded with Moscow.
Both Democrats and Republicans are looking to redress what they consider Trump's weak stance on accusations of Russian interference in 2016 when he met Russian President Vladimir Putin at a summit in July.
The order was described by a USA official familiar with its drafting as "another tool in the tool kit" to deter election interference by foreign adversaries.More news: Donald Trump's autumn visit to Ireland postponed because of 'scheduling reasons'
Trump instead renewed a demand for an investigation of Clinton's email practices as secretary of state and noted that Putin had issued an "extremely strong and powerful" denial.
Bolton said the order was necessary to ensure a formal process and authorisation for sanctions, but he said he was in talks with lawmakers about legislation as well.
"Today's announcement by the Administration recognizes the threat, but does not go far enough to address it", they argued.
The executive order applies to anyone who authorizes, directs or sponsors such meddling.
Virginia Sen. Mark Warner, ranking Democrat on the Senate intelligence committee, said the order leaves the president with broad discretion to decide whether to impose tough sanctions. Sherrod Brown (D-Ohio) said the move "won't substitute for mandatory sanctions required by law" and shouldn't be used to blunt congressional momentum on the issue.
Coats told reporters on Wednesday the intelligence community continues to monitor attempts to influence USA elections, but "we have not seen the intensity of what happened in 2016".
Lawmakers and independent analysts say that federal and state action has already made USA voting systems more secure against foreign hackers. "Unfortunately, President Trump demonstrated in Helsinki and elsewhere that he simply can not be counted upon to stand up to (Russian President Vladimir) Putin when it matters", said Warner, who is sponsoring the bill.
In June, the USA slapped sanctions on several Russian companies and individuals for allegedly aiding Russia's intelligence agency in cyber-attacks against the US. The 45-day period is based on when interference is believed to have happened and not specifically tied to Election Day.