The List of State Sponsors of Terrorism is maintained by the US State department. The State department can add or remove states as it deems appropriate. This act requires no approval, oversight, or vetting. Though I suspect that if a Secretary of State allowed a country to be added or removed against the wishes of the president, they would soon there after be stepping aside for personal reasons. If a state was added that hit the political funny bone of Congress I am sure there would be a storm there as well.
In theory it would prevent the US Government from providing any monetary aid, military trade, or signing any agreements with the organization until they have been removed from the list.
But in reality our government's leaders do what they want anyway regardless of any official designation even when required to do otherwise, or prohibited from doing so. This is not a new phenomena and breaking such restrictions have in the past had some results that many would consider very positive.
- In 1972 Nixon broke a mandated isolation of China and opened up trade with them that helped lead to the growth of what would become the worlds largest economy.
- In 1986 Reagan struck a deal with Soviet Leader Gorbachev that broke a long standing barrier to trade between the nations and was credited for ending the cold war.
- Bill Clinton through use of executive power was able to avert a crisis with the Mexican peso taking action that was against the standing laws and trade agreements of the time.
- George Bush was able to frame a foreign leader that lead to an invasion that killed thousands of Iraqi, as well as a few hundred terrorists, to topple a dictator and usher in an islamic theocracy.
- Due to the military coup in Egypt in 2012 the US Should be prohibited from providing the $5billion in aid... that has not stopped either.
Only 2 of the offending presidents ever faced impeachment. Only one was impeached with Nixon resigning hours before the vote was set to be taken that likely would have lead to his impeachment trial. Neither of those impeachments had (or would have had) to do with the illegal acts they took as president but rather with actions they took in an attempt to prevent them selves from looking bad.
So what it really means is well nothing, but it looks like they are taking a strong stance if you do not realize the truth.