Speaking at the UN Security Council, US envoy Nikki Haley said President Donald Trump had asked his Chinese counterpart to cut off oil supplies to Pyongyang, BBC reported on Wednesday.
She said the US did not seek conflict but that North Korea’s regime would be “utterly destroyed” if war broke out.
The warning came after Pyongyang tested its first missile in two months.
North Korea said the missile fired on Wednesday, which it said reached an altitude of about 4,475 km — more than 10 times the height of the International Space Station — held a warhead capable of re-entering the Earth’s atmosphere.
The claim was not proven and experts have cast doubt on the country’s ability to master such technology.
However North Korea’s leader Kim Jong-un called the launch “impeccable” and a “breakthrough”.
The test — one of several this year — has been condemned by the international community and the UN Security Council called an emergency meeting.
Haley warned that “continued acts of aggression” were only serving to further destabilise the region.
“We need China to do more,” she said. “President Trump called President Xi this morning and told him that we’ve come to the point where China must cut off the oil for North Korea.”
Earlier on Wednesday, the White House said that Trump spoke to Xi Jinping by telephone, urging him to “use all available levers to convince North Korea to end its provocations and return to the path of denuclearisation”.
Speaking in Missouri about tax reform, the US leader derided Kim, describing him as a “sick puppy” and “little rocket man”.
Xi responded by telling Trump it was Beijing’s “unswerving goal to maintain peace and stability in north-east Asia and denuclearise the Korean peninsula”.
China is North Korea’s biggest ally and most important trading partner, and the two share a land border.
Experts say the height reached by the inter-continental ballistic missile (ICBM) indicates Washington could be within range, although North Korea is yet to prove it has reached its aim of miniaturising a nuclear warhead.
The Hwasong-15 missile, described as North Korea’s “most powerful”, was launched in darkness early on Wednesday.
It landed in Japanese waters but flew higher than any other missile the North Korea had previously tested.