The US president has accused Iran of "threatening, destabilising behaviour"
The Iranian President is accusing his United States counterpart of launching “psychological warfare” on his country.
It comes after the US President Donald Trump decided to officially re-impose economic sanctions on Tehran - months after pulling the US out of the Iran nuclear deal.
Iranian leader Hassan Rouhani dismissed calls for talks with the US ahead of the move, warning that the country “cannot be trusted” and “wants to create chaos in Iran.”
President Trump accused Iran of "threatening, destabilising behaviour" ahead of re-imposing the sanctions.
The sanctions, which Mr Trump says are aimed at imposing "maximum economic pressure," are set to be imposed three months after the US announced it was pulling out of the Iran nuclear deal.
The deal, agreed in 2015 between Iran and six global powers, restricted Iran’s nuclear program in exchange for relief on economic sanctions against the country.
All of the signatories to the Joint Comprehensive Plan of Action (JCPOA) are nuclear-armed, except Germany.
On Monday, President Trump doubled down on his position that the agreement was a "horrible, one-sided deal" - claiming it left the Iranian government flush with cash used to fuel conflict in the Middle East.
Washington has left the door open for a new agreement, but said the only way for Iran to avert sanctions would be to agree to negotiations over its missile and nuclear programmes.
The president said the US is urging all nations "to make clear that the Iranian regime faces a choice: either change its threatening, destabilising behaviour and reintegrate with the global economy, or continue down a path of economic isolation."
Mr Rouhani said in a speech broadcast live on state television on Monday: "We are always in favour of diplomacy and talks... but talks needs honesty.
He added: "The US re-imposes sanctions on Iran and pulls out of the nuclear deal, and then wants to hold talks with us.
"Trump's call for direct talks is only for domestic consumption in America ahead of elections... and to create chaos in Iran."
The first phase of US sanctions came into effect one minute after midnight last night, targeting Iran's access to US banknotes and key industries including cars and carpets.
Renewed US hostility has already sparked a run on Iran's currency, which has lost around half its value since Mr Trump's announcement.
It has also added to tensions inside Iran, which has seen days of protests and strikes in multiple towns and cities over water shortages, high prices and wider anger at the political system.
Mr Trump, who broke with European allies when leaving the nuclear deal, warned that those that don't wind down their ties to the Iranian economy "risk severe consequences" under the re-imposed sanctions.
European foreign ministers say they "deeply regret" the US' move.
The European Union's foreign policy chief Federica Mothering and foreign ministers of France, Germany and the United Kingdom insisted on Monday that the 2015 Iran nuclear deal "is working and delivering on its goal" of limiting Iran's nuclear program.
Last Month President Trump said he would be willing to meet Mr Rouhani without preconditions to discuss how to improve relations.
Senior Iranian officials and military commanders have rejected his offer of talks as worthless and "a dream", saying his words contradicted his action of re-imposing sanctions.
President Rouhani has urged President Trump to "make peace" with Iran.
A report on Iran's ISNA news agency reported the president as saying: "American must understand well that peace with Iran is the mother of all peace and war with Iran is the mother of all wars."
Mr Trump responded by using Twitter to warn Iran of consequences "the likes of which few throughout history have ever suffered" if it threatens the US again.