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.
"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.
"There are countries that are allowing, even encouraging, trade with North Korea in violation of UN Security Council resolutions," Haley said. "Such countries would also like to continue their trade arrangements with the United States. That's not going to happen."
Haley called out China specifically, noting that 90% of North Korea's trade is with China.
"Much of the burden of enforcing UN sanctions rests with China," she said. "We will work with China ... but we will not repeat the inadequate approaches of the past that have brought us to this dark day."
On Wednesday morning, President Donald Trump tweeted
, "Trade between China and North Korea grew almost 40% in the first quarter. So much for China working with us - but we had to give it a try!"
Within 24 hours of the launch, the US and South Korea announced they had held a new ballistic missile drill to counter "North Korea's destabilizing and unlawful actions."
The American general leading US troops in South Korea, Gen. Vincent K. Brooks, said in a statement Wednesday the only thing stopping war with North Korea was "self restraint."
"Despite North Korea's repeated provocation the ROK-US alliance is maintaining patience and self restraint," Brooks said in a joint statement with South Korean Joint Chiefs of Staff chairman Gen. Lee Sun Jin.
"As the combined live fire (drill) demonstrated, we may make resolute decisions any time, if the Alliance Commanders in Chief order. Whoever thinks differently is making a serious misjudgment."
Russia, China call for 'freeze'
Haley's warnings did not appear to convince Russia or China, however, who are pushing their own plan for North Korea to stop testing ballistic missiles while the US and South Korea stop joint training exercises, known as a "freeze for freeze" proposal to get North Korea back to the negotiating table.
Russian Deputy Ambassador to the United Nations Vladimir Safronkov also disputed whether the test was in fact an ICBM -- the range is right on the 5,500 kilometer line that's the minimum for an ICBM -- and said sanctions are not the solution.
"Sanctions cannot be a political cure-all," Safronkov said.
Chinese Ambassador to the UN Liu Jieyi, who is president of the Security Council, did not address the question of sanctions at the meeting. He criticized North Korea for launching an ICBM but also was critical of the US and South Korea for deploying the Terminal High Altitude Area Defense missile defense system, or THAAD, in South Korea.
Pieces of the US defense system arrived in South Korea in March, and it was declared partially operational one week before South Korea's new President Moon Jae-in was elected.
After taking power, Moon suspended its deployment, in line with his pre-election promise to put any decision on its future to vote in the country's parliament.
China has long opposed THAAD's deployment, which could in theory be used to spy on its defense and nuclear deterrent systems.
Liu said the THAAD deployment "seriously undermines the strategic security interests" of China and was "not conducive" to de-nuclearizing the Korean Peninsula.
Before the meeting, Liu was asked by reporters whether there should be additional sanctions imposed on North Korea, and he said it should be up to Council members, without taking a position himself.