Tillerson should be negotiating with China, they're the only ones that can resolve this matter peacefully. If the US applied strong sanctions to China, they would act to end Kim. 
Will it be bad for the US economy? Of course the answer is yes but so would the alternative - War. Personally, I'd rather pay more for stuff at Walmart than see my son and his Navy ship sent off to war in Korea. I don't understand why Trump doesn't place responsibility for this mess where it belongs, with China.