Tillerson made the remarks during a joint press conference with his Canadian counterpart at the conclusion of a global summit on the security situation on the Korean peninsula, known as the Vancouver Group.
He added that the U.S. has sent "clear messages" to North Korea that they are "ready for serious negotiations," but the regime must pause its nuclear and ballistic missile tests -- what Tillerson called an "indicator of whether the regime is truly ready to pursue a peaceful diplomatic solution to the security threat that it has created."
Strengthening the enforcement of existing sanctions was a key goal of Tuesday's meeting, which included how nations can better counter sanctions evasion through smuggling. Tillerson called on nations to "strengthen global maritime interdiction operations to foil illicit ship to ship transfers."
"I think that because [North Korea is] feeling bite of sanctions, they're looking for ways to cheat and to smuggle illicit goods. And interdiction is juts one option," the senior State Department official said.
South Korea has already seized two ships accused of smuggling goods into North Korea, including a Hong Kong-flagged oil tanker in December.
The official emphasized that every country has a role to play in interdiction, whether it's reporting illegal activity, sharing intelligence, refusing to allow ships that have engaged in illicit activities from coming to their ports, or de-flagging ships found complicit in violating U.N. sanctions.
"No nation is too small to play an effective role implementing sanctions against North Korea, to deepen their financial and diplomatic isolation," the official said.
When asked about the threat of war with North Korea, Tillerson mentioned the regime's latest nuclear test in September, as well as progress made on their 15 ballistic missile tests in 2017, saying, "We have to recognize that that threat is growing and if North Korea does not choose the pathway of engagement, discussion, negotiation, then they themselves will trigger an option.
"The situation only gets worse, it gets worse with each step they take, it gets worse with time," Tillerson added. "That is not working to their objectives of wanting to be secure. They are not more secure; they are becoming less secure."