North Korea has unveiled a propaganda video of its threat to fire missiles near the US territory of Guam as it threatened the US with “merciless revenge” for ignoring Pyongyang’s warnings over annual military drills with South Korea.

Displaying images of Donald Trump staring at a cemetery filled with crosses and Vice-President Mike Pence enveloped by flames, the nearly 4 minute video showed the island of Guam being targeted by intermediate-range ballistic missiles. 

"Americans should live with their eyes and ears wide open. They will be tormented day and night by the Hwasong-12 rockets without knowing when they will be launched," the caption reads, according to Yonhap. "They will be in jitters."

"(We) just wish US policymakers should seriously think twice ahead of an obvious outcome (of a war)," another caption says, showing a photo of US Defence Secretary James Mattis. "Time is not on the US side."

With the exercises continuing on Tuesday,  North Korea upped its rhetoric, saying it would be a misjudgment for the US to think that Pyongyang would “sit comfortably without doing anything,” the state-run Korean Central News Agency said, citing an unidentified military spokesman.

The ongoing drills and visits of US military officials to South Korea create the circumstances for a “mock war” on the Korean peninsula, KCNA said.

The comments represent a more belligerent tone after a war of words between the US and North Korea appeared to have subsided.