Dandong - a northeastern Chinese city on the North Korean border - is a gateway for trade with isolated North Korea.
The president was to meet for the first time Thursday with South Korea's new leader, President Moon Jae-in, who has long advocated outreach to North Korea.
"This is an effort by the Trump administration to get China to apply more pressure", Bonnie Glaser, the director of the China Power Project at the Center for Strategic and International Studies, told me.
But he warned that Treasury will "follow the money" and take action where needed to cut off illegal finance.
The sanctions are the latest in a series of signs that the US has begun to take action to pressure China after months of fruitless efforts to persuade Beijing to exercise more of its influence with the North.
The US Treasury said North Korea continues to try to evade worldwide sanctions in pursuit of its weapons program.
As South Korea's new president visited Washington, the Treasury Department announced the Bank of Dandong would be severed from the U.S. financial system for acting "as a conduit for illicit North Korean financial activity".
"The administration is right to target any around the world who act as financial lifelines to Kim Jong-un, and to give them a clear choice: You can do business with North Korea or with the United States, but not both", said Royce in a statement.
Sanctions were imposed on Dalian Global Unity Shipping Co., which ships coal and steel between China and North Korea, freezing any property or assets in the USA and prohibiting any US citizen from doing business with the company.
The Bank of Dandong will no longer be able to access the US financial system "either directly or indirectly" and called the action "very significant", Mnuchin said.
Treasury Secretary Steve Mnuchin said the USA still wants to work with Beijing on combating the North Korean threat.
OFAC is also designating Dalian Global Unity Shipping Co., Ltd. (Dalian Global Unity) for sanctions for operating in the transportation industry in the North Korean economy.
-Chinese national Li Hong Ri, said to have established several front companies that end up benefiting Koryo Bank, a USA -sanctioned conduct for financial transactions on behalf of North Korea.
The move is being seen as part of the Trump administrations effort to prevent North Korea from obtaining nuclear weapons and missiles.
In March also, the Trump administration had slapped sanctions against several Chinese businesses and individuals. "We continue to work with them", he said.