US official: 'People need to isolate North Korea'

Treasury Secretary Steven Mnuchin says he’s drafting new sanctions to put economic pressure on North Korea.

His words came after the isolated Asian nation carried out what is believed to be its most powerful nuclear test yet.

"I am going to draft a sanctions package to send to the president for his strong consideration that anybody that wants to do trade or business with them would be prevented from doing trade or business with us," Mnuchin said on Fox News Sunday. "People need to cut off North Korea economically. This is unacceptable behavior."

It's not yet clear how exactly the U.S. would go about implementing those sanctions, either through unilateral action or in another coordinated international effort.

The U.S. has taken recent steps to pressure those who work with North Korea.

In June, the Treasury moved to block a Chinese bank with alleged illicit financial ties to North Korea from gaining access to the U.S. banking system.

But Mnuchin said Sunday that the U.S. can do more, and plans to work with its allies and China to squeeze North Korea.

"China has a lot of trade with them," Mnuchin said. "There's a lot we can do to cut them off economically — much more than we've done already."

China has served as an economic lifeline for North Korea through decades of international sanctions, letting fuel and coal to cross their shared border, providing huge amounts of food aid and allowing its companies to trade with the isolated state.

China, which accounts for over 90% of North Korea's international trade, recently joined in United Nations sanctions of the rogue nation.

Related: Trump says appeasement 'will not work' after N.K. nuclear test

The nuclear weapon test on Sunday was the sixth-ever for North Korea, and the first since Trump took office. The country claimed that it has developed an advanced hydrogen bomb that can fit atop an intercontinental ballistic missile.

Earlier Sunday, Trump called Pyongyang's words and actions "hostile and dangerous." He tweeted that South Korea has found that their "talk of appeasement will not work."

When asked if the U.S. will consider a military response, Mnuchin said Sunday that the administration is "not going to broadcast" its planned course of action.

But he added that Trump has made it clear that "this isn't the time for just talk."

--CNN's Angela Dewan and Taehoon Lee and CNNMoney's Jethro Mullen and Charles Riley contributed to this report.