"Should have happened a long time ago", Trump told reporters at the beginning of a Monday morning Cabinet meeting.
The move is meant to curb Pyongyang's pursuit of nuclear weapons, but Mike Fuchs, senior fellow at the Center for American Progress, tells Bustle that the designation is a "step backward" and will make diplomacy with North Korea more hard.
The designation came a week after Trump returned from a 12-day, five-nation trip to Asia in which he made containing North Korea's nuclear ambitions a centerpiece of his discussions.
North Korea said last week that it has no intention of ending its nuclear program, North Korea's Ambassador to the UN Han Tae-song. The latest missile test overflew Japan Sept. 15.
North Korea's state-run Minju Joson newspaper ran an editorial which said: "A load of rubbish spouted by the old lunatic Trump during his recent visit to South Korea was a total nonsense and paradox so far".
The North Korean commentary accused Mr Trump of committing a "hideous crime against the Korean people" by insulting its leader, and warning that this "thrice-cursed crime can never be pardoned". With Iran, Sudan, and Syria also being on the list administered by the State Department, exactly what does being a state sponsor of terror mean?More news: Top US nuclear commander would resist 'illegal' launch of nuclear weapons
"It will be the highest level of sanctions by the time it's finished over a two-week period", Trump said.
North Korea was put on the USA terrorism sponsor list for the 1987 bombing of a Korean Air flight that killed all 115 people aboard.
A USA intelligence official who follows developments in North Korea expressed concern that the move could backfire, especially given that the basis for the designation is arguable. It was removed under George W. Bush's presidency as part of a diplomatic deal for North Korea to allow inspection of its Yongbyon nuclear facility, as well as dismantle a plutonium plant-neither of which were done.
"The Treasury Department will be announcing an additional sanction - and a large one - on North Korea", he said. In making the announcement, Trump did refer to Warmbier "and the countless others so brutally affected" by North Korean oppression.
In any case, it will do little to open the way for US dialogue with North Korea, which China, Pyongyang's No. 1 ally, and others have been pushing for.