Ms Haley called the test – of an intercontinental ballistic missile that experts say may able to hit Alaska – "reckless and irresponsible" and a "clear and sharp military escalation".
She added that the US is prepared to use its full range of capabilities, including military force, to deter North Korea if necessary.
"One of our capabilities lies with our considerable military forces," she said. "We will use them if we must, but we prefer not to have to go in that direction."
Other deterrence strategies include harsher sanctions on the country, which Ms Haley said she would propose in the coming days. She added that the US may go as far as cutting off trade with countries that continue trading with North Korea.
The White House said only that it was "exploring those options".
The comments come the day after North Korea tested an ICBM it claims can strike "the heart of the United States”.
Pentagon officials said the missile, believed to be a modified KN-17 liquid fuel device, was something they had "never seen before". Officials saw the KN-17 being prepared for launch via satellite, but say a second stage was added later.
The US responded the next morning with a joint military exercise with South Korea, firing ballistic missiles into the water along the east coast of the Korean Peninsula.
Secretary of State Rex Tillerson said the US "seeks only the peaceful denuclearisation of the Korean Peninsula and the end of threatening actions by North Korea". He also said the US would bring North Korea's "provocative action" to the UN Security Council in hopes of enacting stronger measures against them.
The Council gathered in an emergency meeting called by the US on Wednesday afternoon.
At the meeting, British Ambassador to the UN Matthew Rycroft said Britain supports measures to increase the cost of missile testing for North Korea. French Ambassador François Delattre said a "decisive collective response" is necessary.
But Russia's deputy envoy to the UN, Vladimir Safronkov, said his country opposed any military actions or attempts to "economically strangle North Korea".
"All must acknowledge that sanctions will not solve the issue," he said, voicing support for "dialogue and consultations" instead.
Both Russia and China appear likely to veto any sanctions proposed by the United States.
The missile test is widely seen as a challenge to the Trump administration, which has taken a hard line on North Korean aggression.
The day after the test, Mr Trump lashed out at China, who he had hoped would put economic pressure on North Korea.
"Trade between China and North Korea grew almost 40% in the first quarter," he tweeted. "So much for China working with us - but we had to give it a try!"
Ms Haley appeared to double down on these comments on Wednesday, chastising those countries she says are "encouraging" trade with North Korea.
"Such countries would also like to continue their trade arrangements with the United States," she said. "That's not going to happen."
The Ambassador also condemned North Korea's treatment of Otto Warmbier, a 22-year-old American who was detained in North Korea for allegedly stealing a poster. Mr Warmbier was returned to his parents in a coma last month. He died days afterward.
Ms Haley said North Korea's treatment of Mr Warmbier was emblematic of the regime as a whole.
"If North Korea will treat an innocent student the way it treated Otto Warmbier, we should not be surprised if it acts barbarically on a larger scale," she said.
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