Story highlights Haley called for an "escalated diplomatic and economic response"

She called out China specifically, noting that 90% of North Korea's trade is with China

(CNN) US Ambassador to the United Nations Nikki Haley on Wednesday called North Korea's intercontinental ballistic missile launch test a "clear and sharp military escalation" and said US military action remained on the table.

She also warned China and other countries supporting North Korea that their trade with the US could be at risk if they do not stop aiding the Pyongyang regime.

JUST WATCHED Footage emerges of North Korea's ICBM launch Replay More Videos ... MUST WATCH Footage emerges of North Korea's ICBM launch 00:47

"The US is prepared to use the full range of our capabilities to defend ourselves and our allies," Haley said. "One of our capabilities lies with our considerable military forces. We will use them if we must, but we prefer not to have to go in that direction."

Wednesday's UN Security Council meeting came in response to North Korea's first ICBM test, which US officials assess was a new kind of missile that had a range of about 5,500 kilometers (3,400 miles), capable of hitting Alaska.

Haley said "the world is on notice" after the launch, calling for an "escalated diplomatic and economic response" and warning countries not to water down resolutions against Pyongyang.

Read More