New York: US President Donald Trump has announced new financial sanctions on Iran's most senior leaders and military officials following the shooting down of a US drone last week.

The decision reinforces Trump's preferred strategy of attempting to change Iran's behaviour through economic damage rather than through military action. Trump last week called off a planned retaliatory strike on Iranian facilities at the last minute after learning the operation would result in 150 deaths.

President Donald Trump holds up a signed executive order to increase sanctions on Iran.Credit:AP

"We do not seek conflict with Iran or any other country. I think a lot of restraint has been shown by us, but that doesn’t mean we’re going to show it in the future."

Trump added: "Never can Iran have a nuclear weapon."

Treasury Secretary Steve Mnuchin said the sanctions would "lock up literally billions of dollars of assets".

The Treasury Department later announced that its Office of Foreign Assets Control had taken action against eight senior commanders of Iran's Islamic Revolutionary Guards Corps (IRGC).

"The United States is targeting those responsible for effectuating the Iranian regime’s destructive influence in the Middle East," Mnuchin said in a statement.

"This action is a warning to officials at all levels of the IRGC and the rest of the Iranian regime that we will continue to sanction those who export violence, sabotage, and terrorism."

Asked whether the new sanctions were a response to Iran’s downing of the unmanned drone over the Strait of Hormuz last week, Trump said that "you could probably add that into this".

But then he said: "This is something that was going to happen anyway."

Before the announcement, Iranian officials downplayed the prospect of new sanctions.

They were "just propaganda, as all sanctions … have been imposed and there are no more sanctions left", the state-run news agency IRIB quoted Foreign Ministry spokesman Abbas Mousavi as saying.

Pompeo, America's top diplomat, is travelling to Saudi Arabia and the United Arab Emirates before making pre-planned trips to India, Japan and South Korea.

"We'll be talking with them about how to make sure that we are all strategically aligned, and how we can build out a global coalition, a coalition not only throughout the Gulf states, but in Asia and in Europe, that understands this challenge as it is prepared to push back against the world's largest state sponsor of terror," Pompeo said.

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