Iran's president Hassan Rouhani has branded the White House 'mentally retarded' after Donald Trump issued fresh sanctions against the leadership in Tehran.

Rouhani said the move proves that America is lying about wanting to negotiate and only proves that Washington is desperate and running out of options.

Speaking to a session of ministers that was broadcast on TV, Rouhani added that the new sanctions are 'outrageous and idiotic' and will fail because Ayatollah Khamenei - one of the main targets - has no foreign assets.

Trump imposed the sanctions Monday after Iran shot down a US spy drone which it claimed violated its airspace last week. America says the drone was in international airspace and the attack was 'unprovoked'.

Hassan Rouhani has branded Donald Trump 'mentally retarded' over 'outrageous and idiotic' new sanctions imposed on Iran, which he says proves the US does not want to negotiate

It comes after Iran's foreign ministry spokesman Abbas Mousavi warned that targeting Iran's ayatollah with new measures would close the door on diplomacy

President Donald Trump on Monday signed an executive order with sanctions on Iran in response to their 'aggressive' behavior after Tehran shot down a $100million US Navy drone

Rouhani pointed to sanctions leveled against Foreign Minister Mohammad Javad Zarif as evidence that Washington is not looking for a discussion.

He said: 'You sanction the foreign minister simultaneously with a request for talks?'

Rouhani spoke shortly after National Security Advisor John Bolton insisted that Washington had 'held the door open to real negotiations' and that 'in response, Iran's silence has been deafening.'

Also on Tuesday, Iran's foreign ministry spokesman Abbas Mousavi warned that new sanctions would permanently close the door on negotiations.

'Trump's desperate administration is destroying the established international mechanisms for maintaining world peace and security,' he tweeted.

Mousavi said the 'fruitless sanction on Iran's leadership and the chief of Iranian diplomacy mean the permanent closure of the road of diplomacy with the frustrated U.S. administration.'

Trump enacted new 'hard-hitting' sanctions Monday targeting Iran's Supreme Leader Ayatollah Ali Khamenei pictured above on June 19

This comes amid heightened tensions between Iran and the U.S. after the Trump administration tore up a nuclear deal signed under Obama, before Iran last week shot down a $100million U.S. Navy surveillance drone.

On Monday Trump signed an executive order with new 'hard-hitting' sanctions on Iran directly targeted at Supreme Leader Ali Khamenei after what he called a 'series of aggressive behaviors' by the regime.

He said the ayatollah's own finances would now be in U.S. crosshairs as he stepped up the rhetoric against Iran, despite calling off U.S. airstrikes minutes before planes were due to take to the air on Thursday night.

'I'll be signing an executive order imposing hard-hitting sanctions on the supreme leader of Iran on the office of the supreme leader of Iran and many others. Today's action follows a series of aggressive behaviors by the Iranian regime in recent weeks, including shooting down of U.S. drones,' Trump said in the Oval Office on Monday.

'We do not seek conflict with Iran or any other country,' he added.

'I think a lot of restraint has been shown by us – a lot of restraint – and that doesn't mean we're going to show it in the future. But, I felt that we want to give this a chance, give it a good chance, because I think Iran potentially has a phenomenal future.'

Tensions between the two nations exploded last week after initial sanctions against Iran led to the attacks on two oil tankers in the Strait of Hormuz. e U.S. blamed that attack on Iran, which has denied involvement. An oil tanker pictured on fire in the sea of Oman on June 13 above

This file image released by the U.S. Department of Defense Monday, June 17, 2019, and taken from a U.S. Navy helicopter, shows what the Navy says are members of the Islamic Revolutionary Guard Corps Navy removing an unexploded limpet mine from the M/T Kokuka Courageous. A series of attacks on oil tankers near the Persian Gulf has ratcheted up tensions between the U.S. and Iran

U.S. officials also said they plan sanctions against Iranian Foreign Minister Mohammad Javad Zarif.

Washington says the measures were taken to discourage Tehran from developing nuclear weapons and supporting militant groups

Tensions between the two nations have been steadily building since America backed out of a nuclear pact signed with Iran a year ago and reimposed sanctions.

Last month, two oil tankers were attacked in the Strait of Hormuz - a strategically important bottle-neck through which much of the world's oil supply flows - that America and Saudi Arabia blamed on Iran.

The spurred the US to deploy a carrier strike group to the region and send extra troops to counter what it described as a 'credible threat' against its forces.

Then, on June 13, two more tankers were attacked and the US again pointed the finger at the regime in Tehran.

Intelligence services subsequently released what they said was footage of Iranian vessels returning to collect limpet mines used in the attack which had failed to explode in an effort to cover their tracks.

Last week, Tehran shot down a $100million US Navy drone which it claimed had violated its airspace. America denied this, calling it an 'unprovoked attack'.

Treasury Secretary Steve Mnuchin told reporters that the administration will 'lock up literally billion dollars in assets' of Iran's

President Donald Trump signs an executive order imposing fresh sanctions on Iran as Treasury Secretary Steven Mnuchin and Vice President Mike Pence look on

President Trump approved airstrikes against a number of Iranian targets but backed down at the last moment, saying the response would not be 'proportionate'.

Instead, the U.S. military carried out a cyberattack against Iranian missile systems and a spy network, as per Fox.

'Now along with our existing sanctions authority, we have additional sanctions to go after the supreme leaders' office and lock up literally billions of dollars more of assets,' Treasury Secretary Steve Mnuchin told reporters.

'These sanctions are highly, highly-effective in locking up the Iranian economy,' he said.

Mnuchin said the order was in the works before last week's downing by Iran of a U.S. military surveillance drone and he also indicted it was in response to that as well as to previous Iranian actions in the Gulf, including attack on the oil tankers.

The president also warned Tehran it can never have a nuclear weapon.

How the claims differ: Iran and the U.S. differ on where the drone was when it was targeted

A RQ-4 Global Hawk unmanned air drone

'We cannot ever let Iran have a nuclear weapon and it won't happen and secondly, and very importantly, we don't want money going out to sponsor terror. They are the number one sponsor of terror in the world. So I'll sign this order right now,' Trump said.

The United States pulled out of a 2015 nuclear deal that world powers signed with Iran and has applied crushing sanctions on the Islamic nation.

Last year, the U.S. aimed to cut off all revenue from Iran's oil export - the money that keeps the country running. The goal was regime change in Tehran.

Despite the escalating strain between the two countries, the U.S. envoy at the United Nations, Jonathan Cohen, said the Trump administration's aim is to get Tehran back to negotiations.