Trump previous year withdrew from the 2015 nuclear pact brokered by the Obama administration with world powers and reimposed sanctions on Iran. "That is when you believe all options are at an end", Smith told Reuters.
Trump said he decided the strike, to punish Iran for shooting down the drone, would have killed too many people.
The Trump administration wants to force Tehran to open talks on its nuclear and missile programs and its activities in the region. "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", Mnuchin said. The attack was coordinated with the U.S. Central Command, which overseas military operations in the Middle East.
"As long as this threat is there, there is no way that Iran and the USA can start a dialogue", said the ambassador.
Iran's Foreign Minister Mohammad Javad Zarif, responding to the sanctions in a Twitter post, said hawkish politicians close to Trump "despise diplomacy, and thirst for war".
Trump's latest signalling of a pullback from what has always been a region featuring an intense USA presence comes amid growing military tension between the United States and Iran.
They did not provide further details about the secret operations under consideration by the White House, the report said. There's a risk that next time Trump will listen to that advice and the USA will find itself in another Mideast war even though the president has railed against the outcomes in Afghanistan and Iraq.
Last month, the president stepped up pressure by ending exemptions from secondary sanctions for countries still buying Iranian oil, saying he wanted to deny Iran's government its principal source of revenue.
The United States launched cyberattacks targeting Iranian missiles and rockets after the Islamic Revolution Guards Corps shot down a U.S. Navy RQ-4A Global Hawk drone last week, Iran media reported.
That follows a series of attacks on ships in sensitive Gulf waters which the U.S. has blamed on Iran - claims hotly denied by Tehran. A Japanese tanker was one of those targeted in the Gulf of Oman.
"We will stand by the United States as our strongest ally but of course we have to consider any requests for military support on a case-by-case basis", he told the Daily Mail.
"The U.S. request for Iran is very simple", he wrote.
Standing alongside Trump, the treasury secretary, Steven Mnuchin, said the measures would freeze billions of dollars in Iranian assets.
Mousavi also reportedly accused the USA of warmongering. While Russia has openly criticised the move, US Secretary of State Mike Pompeo - during his visit to Riyadh - reportedly asked UAE and Saudi Arabia to step up surveillance on Iran.
"Freedom of navigation is paramount", Pompeo tweeted from the Saudi city of Jeddah. "The president has also instructed me that we will be designating Zarif later this week".