Kim Jong Un has described Donald Trump as "deranged" and Pyongyang's foreign minister said North Korea may test a hydrogen bomb in the Pacific as the recalcitrant nation hit back at the US president's latest threats and sanctions.
However, Deputy Prime Minister Barnaby Joyce said dropping an H-bomb would be a mistake for the region.
"That would be a disaster beyond compare for the region, for the people of North Korea, who have no dog in this fight, who are just trying to feed themselves," he told reporters in Perth on Friday after a long pause of speechlessness.
"But ultimately, one bad person puts a threat to the peace of our region and the economics of our region and the prosperity of our region ... there will come a point where somebody, somewhere is going to have to do something about this."
Kim Jong Un has called Donald Trump's UN speech a "declaration of war" and says he'll make the US president pay for threatening to destroy North Korea.
Trump signed an executive order on Thursday boosting the United States' ability to sanction foreign banks, individuals and companies that facilitate trade with North Korea.
The move "will cut off sources of revenue that fund (North Korea's) efforts to develop the deadliest weapons known to humankind," Trump said on the sidelines of the UN General Assembly in New York.
Responding to Trump's maiden address at the UN on Tuesday in which he threatened to "totally destroy" North Korea if it attacked the US or its allies, Kim Jong Un issued a rare statement on Friday describing the speech as "unprecedented rude nonsense."
Kim said Trump's "mentally deranged behaviour" and his threat to "totally destroy" North Korea "convinced me ... that the path I chose is correct and that is the one I have to follow to the last."
Kim said Trump would "pay dearly" and after his "ferocious declaration" of war, North Korea country would consider a "corresponding, highest level of hard-line countermeasure."
When asked by reporters in New York what the countermeasure could be, North Korean Foreign Minister Ri Yong Ho said: "It could be the most powerful detonation of an H-bomb in the Pacific."
"We have no idea about what actions could be taken as it will be ordered by leader Kim Jong Un," Ri added, according to South Korea's Yonhap news agency.
The international community has been increasing pressure on North Korea over a series of recent missile and nuclear tests, and the issue has been a major point of discussion at the UN General Assembly.
The new US order will allow Treasury Secretary Steven Mnuchin to blacklist foreign banks that conduct or facilitate significant transactions tied to North Korean trade or with those under existing sanctions.
"Foreign financial institutions are now on notice that going forward they can choose to do business with the United States or North Korea but not both," Mnuchin told reporters.
Kim Jong Un has been described as "rocket man on a suicide mission" by Donald Trump. Source: AAP
"We call on all countries around the world to join us by cutting off all trade and financial transactions with North Korea."
The order also will allow the US to sanction those involved in industries, including fishing, technology, textiles and manufacturing, that finance the North Korean regime, as well as those involved in the operation of the country's ports or in exporting and importing goods and services.
