Washington said on Friday it was imposing its largest package of sanctions to pressure North Korea to give up its nuclear missile program, and US President Donald Trump warned of a "phase two" if the steps did not work. In addressing the Trump administrations biggest national security challenge, the US Treasury sanctioned one person, 27 companies and 28 ships, according to a statement on the US Treasury Departments website. The United States also proposed a list of entities to be blacklisted under separate UN sanctions, a move "aimed at shutting down North Koreas illicit maritime smuggling activities to obtain oil and sell coal." North Korea has been developing nuclear-tipped missiles capable of reaching the US mainland and Trump and North Korean leader Kim Jong Un have exchanged taunts that have raised fears of war. In August, Trump threatened to go beyond sanctions by bringing "fire and fury like the world has never seen," although his administration has repeatedly said it prefers a diplomatic solution to the crisis. Speaking at a news conference with Australian Prime Minister Malcolm Turnbull, Trump made apparent reference to military options his administration has repeatedly said remain on the table. "If the sanctions dont work, well have to go phase two," Trump said. "Phase two may be a very rough thing, may be very, very unfortunate for the world. But hopefully the sanctions will work." Speaking to reporters in Pyeongchang Saturday on a visit to the Winter Olympics, White House spokeswoman Sarah Sanders said: "Hopefully well see a change on the part of the North Koreans to start to denuclearize the peninsula, thats what our focus is." She added: "I can tell you the president wont make the mistakes the previous administration has and be soft or weak." Treasury Secretary Steve Mnuchin also said there were signs the punitive measures were starting to have an impact, but did not elaborate.