Declaring North Korea a terrorist state should have happened years ago: Trump

A week after returning from a five-nation Asia tour, US President Donald Trump today declared North Korea as a "state sponsor of terrorism" as the standoff between the US and its allies and Kim's regime continued to build on Monday.

"Should have happened a long time ago. Should have happened years ago," Trump said, adding the Treasury Department would announce additional sanctions against North Korea on Tuesday.

"In addition to threatening the world by nuclear devastation, North Korea has repeatedly supported acts of international terrorism, including assassinations on foreign soil," Trump told reporters at the White House.

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Trump said the sanctions as a result of designating North Korea a terrorist state would lead to "very large" US Treasury sanctions that would eventually amount to a "maximum pressure campaign."

"This designation will impose further sanctions and penalties on North Korea and related persons and supports our maximum pressure campaign to isolate the murderous regime," the US president said.

President Trump and North Korean leader Kim Jong-un had traded insults during the president's trip to Asia last week with the US refusing to back down over conducting military drills on Korean waters with its allies Japan and South Korea.

North Korea's neighbour Japan said it "welcomes and supports" the US move to relist Pyongyang as a state sponsor of terrorism.

Amid the sanctions and rhetoric, US secretary of state Rex Tillerson has been using diplomatic back channels with the Korean government and its ally China to bring a semblance of compromise, Tillerson said sanctions were already having a "significant effect" on Pyongyang's economy.

The US and its allies fear Kim may be preparing for yet another nuclear test as pressure grows on the North Korean nation to give up its hardline stance.

"We know that there are current shortages of fuel based upon what we can gather anecdotally and also from certain intelligence sources," Tillerson said.

"We know that their revenues are down," he said. "So I think it is having an effect," the US secretary of state added.