US President Donald Trump's administration could hit Iran with new sanctions as early as Friday following Tehran's test-fire of a medium-range ballistic missile, said a report.

However, sources provided the caveat that nothing is ever final, until President Trump announces it, according to NBC News.

Trump has tweeted that "Iran is playing with fire," and warned Tehran that he won’t be as “kind” as former President Barack Obama. His comments come after Tehran’s missile test this week.

On Wednesday, National Security Adviser Michael Flynn said the White House was putting Iran "on notice."

Two officials tell NBC News that the new sanctions are in response to the continuous terrorist activity of Iran and repeated ballistic missile tests, but will not violate the existing Iranian nuclear deal.

Meanwhile a defiant Iran has vowed that it will not bow to threats from the US and would continue its missile activity.

A senior adviser to Ayatollah Ali Khamenei, the Iranian supreme leader, criticised the "extremism" of Trump, who has declared Iran was "on notice" after it test-fired a ballistic missile on Sunday.  according to CNN.

Following a meeting on Thursday with Harley-Davidson executives in the White House, Trump declined to rule out the prospect of military action against the Islamic republic, said the report.

"Nothing's off the table," it quoted him as saying.

The tensions between the two countries have been simmering since the election of Trump, a harsh critic of the nuclear deal with lran that the Obama administration brokered.

Last week, Trump announced a temporary travel ban on nationals from Iran and six other Muslim-majority countries, barring them from entering the US.

The sudden escalations of US-Iranian tensions have raised concerns about the future of the nuclear accord with Iran, which put stringent limits on the country's nuclear program. It allowed sanctions to be eased and business with Iran to recommence.

Trump has been a longtime critic of the accord, which was brokered after two years of talks with the five members of the Security Council and Germany in 2015.

At some points, Trump vowed to strictly police the agreement. At others, he threatened to tear it up, said the report.

Iran has confirmed that it test-fired a missile on Sunday but insisted it did not violate the nuclear deal because this missile is not capable of delivering a nuclear warhead. It was the first launch of its kind since Trump took office.